Northern Ireland’s housing market is improving, with the number of transactions at their highest for the past two years, according to the latest University of Ulster House Price Index.

The survey, the longest-running and most comprehensive in Northern Ireland – produced in partnership with Bank of Ireland and the Northern Ireland Housing Executive – said the rate at which house prices were falling had dropped from 35% at the start of 2009 to just below 7% at the end of the year.

The authors of the latest report - Prof Alastair Adair, Prof Stanley McGreal, Louise Brown and David McIlhatton - said: “This latest survey indicates an improving housing market. Although overall average prices are still down, the rate of price decline has slowed significantly, with prospects for a modest increase in price levels during 2010.”

The price statistics are based on a sample of 1,050 transactions in the fourth quarter of last year. Although that is about half of what would be expected under normal conditions, the report said there had been a significant increase in the number of sales from recent surveys, suggesting a recovery in the market could be underway.

The survey put the overall average price of a house in Northern Ireland in the fourth quarter of 2009 at £161,429. This represented a weighted decrease of 0.9% compared to the average price in third quarter but represented a slight increase on the average price for the second quarter. The report said this type of variability was to be expected as the market recovers in a slightly hesitant manner.

The economist Alan Bridle, Head of Economics and Research at Bank of Ireland Northern Ireland, said: "The real mark of recovery in our housing market will be a pick-up in the number of transactions. This survey sounds an encouraging note.

“Steady progress in activity levels may be the most likely and desirable scenario for this year but in my view we should not expect much of a re-bound in average prices and there is still a risk of them slipping further.”

The survey again showed property was becoming more affordable, with 57% of all properties selling at or below £150,000.

Mr Bridle added that first-time buyers, although having to find higher deposits, now had lower debt-servicing costs. He said interest payments as a percentage of income were now back at “pre-boom” levels of around 14%.

The Housing Executive’s Head of Research, Joe Frey, commented: “The increase in the level of transactions is to be welcomed as an indication that the housing market is returning to more normal conditions. However, we foresee continuing difficulties both for first-time buyers and for households looking for a social dwelling. The private rented sector will therefore play a much bigger role in Northern Ireland’s housing market in the future.”

The latest survey again confirmed the problems of getting the resale market fully functioning, with newly-built houses, at 32% of the total, taking a disproportionately large percentage of the sales.

House Price Index

The long-term House Price Index, calculated relative to the base quarter for the survey in 1984, showed a very slight decrease from the previous quarter and stands at 607.6.

The graph of the index demonstrates the spike in the local market from 2005 to 2009 and the report’s authors stress that price levels are probably just about where they might be if growth rates in 2004 were projected forward.

Property Types

The rate of annual decline in the fourth quarter of 2009 was substantially lower for most types of property. There were two exceptions – the apartment sector, with an average price of £124,597, had a higher rate of annual decline of 18.9%, while the detached house sector, with an average of £250,119 showed modest growth of 1.2% over the year.

For terraced/townhouses the overall rate of annual decline reduced significantly to 7.4%, with an average price in the fourth quarter of £124,904.

Semi-detached houses showed a similar rate of decline, down 7.8% to an average of £153,140.

The average price of detached bungalows was £197,541, down by 9.5% over the year, and semi-detached bungalows declined by only 3.9% to £133,983.

Short-term performance – comparing prices in the fourth quarter with those in the third quarter – was variable and confirmed the unevenness of the market recovery. Over the quarter, four sectors showed an increase in average sale prices – terraced/townhouses up by 9.7%, semi-detached houses by 2.3%, semi-detached bungalows by 12.8% and detached bungalows by 5.2%. In contrast, detached houses were down by 7.9% and apartments by 13.7% over the quarter.

Regional performance

At a regional level there were also some tentative signs of recovery but the evidence was variable and rather uneven.

In Belfast the average price of housing at £164,476 was down compared to the average of £178,399 in the corresponding quarter of 2008.

Over the year all sectors experienced lower average prices with the exception of terraced/townhouses which were up by 0.8% to £138,040. Detached houses were down by 3% to £302,114 and semi-detached house fell by 9.3% to £179,992. The largest decline was for apartments, falling 23.5% to £130,355.

The highest priced city location was south Belfast (£203,649), followed by the east (£175,786), west (£127,298) and north (£115,799)

North Down’s average house price of £186,272 represented a slightly improved market over the year and was one of the few locations to show an overall price increase for the year at 1.2%. However, an analysis of different property types showed that most of them fell in price and suggested that, in common with other areas, the recovery will be variable with unevenness between property types.

The average price in Lisburn at £180,904 was down 3.6% over the year, a rate of reduction much lower than in previous quarter reports in 2009, suggesting the market was in recovery stage. But the overall trend masked variability between property types. Semi-detached houses, for instance, were down 23.4% but terraced/townhouses showed significantly increased sale prices.

In East Antrim the overall average price fell by 7.3% over the year to £137,088, again showing an improved situation. All property types showed reductions with the exception of detached homes which were up by 5.7% to £212,321.

In Antrim/Ballymena the overall average price of £170,739 indicated a small decline of 3.7% over the year. Although some limited growth was apparent in some types, the picture was variable with the average price of semi-detached homes up by 5.3% but that for terraced/townhouses down by 34%.

For the Coleraine/Limavady/North Coast region the overall average price of £163,684 was slightly up over the year by 0.9%. All sectors of the market showed improvement. Apartments, in contrast to other areas of Northern Ireland, showed a 27% rise in average sale price over the year to £170,000.

For Derry/Strabane the overall average of £149,263 was marginally up by 0.2% suggesting the market had bottomed out. In the latest survey the terraced/townhouse market showed a significant price increase over the year to £139,429

The overall average price for Mid-Ulster was £148,256, representing a very slight increase of 0.6%. However, the picture of annual change was variable with terraced/townhouses down significantly over the year but with semi-detached houses marginally strengthening their average price.

In Enniskillen/Fermanagh/South Tyrone the overall average price was up 10.5% over the year to £150,020 which, compared to annual declines recorded in previous surveys in 2009, points to a recovery in the local market. That recovery appears to be led by the detached house sector, where the average price was £259,500.

For Craigavon/Armagh the overall average price of £134,993 was down over the year by 6.2%, similar to that for the overall Northern Ireland market. Some property types performed better with, for instance, semi-detached houses rising by 5.2% to £127,883, but with terraced/townhouses considerably down in price at £70,500

In Mid & South Down, the average price of £169,213 was down just 4% over a year, pointing to more stabilised marked conditions. All sectors were characterised by lower price levels. Terraced/townhouses suffered most, falling by 29.5%, but the average for detached houses fell by just 3%.

Ends

Notes to Editors:

TABLES

Performance by Property Type

Market sectorAnnual change

Average Price

Quarter 4

Terraced/townhouse

-7.4%

£124,904

Semi-detached house

-7.8%

£153,140

Detached house

1.2%

£250,119

Semi-detached bungalow

-3.9%

£133,983

Detached bungalow

-9.5%

£197,541

Apartment

-18.9%

£124,597