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Modest Rise In Average NI House Price, But Recovery Still Tentative

The average house price in Northern Ireland rose modestly in the first quarter of this year but any recovery in the market remains tentative, according to the region’s most comprehensive survey of house prices.

The latest University of Ulster Quarterly House Price Index, produced in partnership with Bank of Ireland and the Northern Ireland Housing Executive, recorded an annual weighted rate of price growth of 4.9%.

However, the number of transactions reported by the 120 estate agents in the survey fell back to 800 from more than 1,000 in the final quarter of 2009.

The authors of the report - Prof Alastair Adair, Prof Stanley McGreal and David McIlhatton - said: “The latest data highlights the tentative recovery of the housing market, with a weighted rate of price growth over a year of 4.9%.

”However, the findings suggest that recovery is patchy and varies across different property types and areas of Northern Ireland. The pace of growth is likely to be impacted by macroeconomic conditions and the steps that the new government takes to reduce the public deficit.”

The authors said the smaller sample size in the first quarter was caused by continuing difficulties in the market, the cold winter and the change in stamp duty which produced a flurry of sales in the final quarter of last year.

The overall average price of a house in Northern Ireland for the first quarter of this year was £169,497 compared to £161,429 in the final quarter of 2009. The report uses a weighted index to even out the fluctuations in sample composition and this showed an annual growth rate of 4.9% in the first quarter of this year in stark contrast to an annual decline of 35% recorded in the first quarter of 2009.

The economist Alan Bridle, Head of Economics and Research at Bank of Ireland Northern Ireland, said: "Eastern areas such as Belfast and North Down seem to be seeing some signs of recovery but the picture for Mid Ulster and the west remains particularly challenging. The recovery will be patchy and uneven in 2010 and I expect the average house price to remain a little erratic until sales volumes return to more normal levels. 

“The market is increasingly influenced by the private rental sector which has grown significantly because investors or owner-occupiers are either unable or unwilling to sell at the new lower price levels, while demand has risen from those who find it harder to obtain a mortgage or who have deferred buying a home in the belief prices will fall further.”

The survey confirmed the affordability of housing, with 54% of all properties selling at or below £150,000.

The Housing Executive’s Head of Research, Joe Frey commented “The latest Quarterly Price Index provides further evidence of stabilisation in the housing market. However, bearing in mind the wider economic context and the expected reductions in public expenditure it would appear that the road to a more balanced housing market will be challenging.”

The latest survey also showed that the resale market is still not fully functioning, with newly-built houses representing a disproportionately large 39% of the sales.

House Price Index

The long-term House Price Index, calculated relative to the base quarter for the survey in 1984, strengthened to 618.

The graph of the index suggests recovery is taking place following the dramatic falls which started in the third quarter of 2007, although short-term fluctuations are likely to characterise the recovery phase.

Property Types

Although prices rose overall, the picture varied across property types. Some fell in price while others, such as detached houses and semi-detached bungalows, showed significant increases.

At one extreme, terraced/townhouses at an average price of £123,023 were down by 2.3% over a year and semi-detached houses fell by 4.3% to an average of £144,888. In contrast the average price for a detached house rose by 20.7% to £292,852 and for semi-detached bungalows it was up 15.6% to £137,706. Apartments rose by 2.4% to £142,959 and detached-bungalows increased by just 0.5% to an average of £185,470.

Regional performance

At a regional level there were also some tentative signs of recovery but the evidence was very variable, with market performance stronger in the Belfast area than elsewhere.

In Belfast the average price of housing rose strongly by 18% over a year to £183,498, representing the best performance in the city’s housing market since 2007.

All sectors saw annual growth in prices with terraced/townhouses up by 18% to an average of £140,653. Detached houses rose by 11.9% to £333,353; semi-detached houses went up by 3.7% to £166,920; and apartments increased by 5.5% to £155,057.

The highest priced city location was south Belfast (£219,187), followed by the east (£176,521), west (£161,703) and north (£124,291).

North Down’s average house price of £228,818 represented a staggering 28.7% improvement over the year. A major contributor to this growth was an annual rise in the average price of detached houses by 19.5% to £432,342.  Terraced/townhouses also improved but the average prices for semi-detached houses and apartments were down.

The average house price in Lisburn was down 6.5% over the year to £164,367, reflecting the variability in price changes that characterise the recovery stage. Terraced/townhouses, which had improved the previous quarter, were down by 20.4% while apartments in contrast showed a 5.9% rise. 

In East Antrim the overall average price was up by 7.6% annually to an average of £143,334. The best performing sector was detached houses up by almost 33% but apartments fell in price by 14.9%.

In Antrim/Ballymena the overall average price of £174,965 represented an annual rise of 9.9%. Continued improvement in the local market was helped by the performance of the detached house sector and by prices for terraced/townhouses.

For the Coleraine/Limavady/North Coast region the overall average price of £155,343 was down over a year by 8.7%. The market remains volatile, with all sectors of the market, except detached houses, falling back.

For Derry/Strabane the overall average of £137,298 declined by 8.4% over a year, suggesting that the expectations of the local market having bottomed out were premature. Performance across property types varied, with detached bungalows the only sector to show gains.

The overall average price for Mid-Ulster was £140,435 representing continued improvement with an annual rise of 2.5%. The picture varies across different property types, with detached homes leading the field in price increases, and terrace/townhouses dropping slightly.

In Enniskillen/Fermanagh/South Tyrone the overall average price fell by 17% over a year to £132,444, reversing improvements seen in the previous quarter. The sample size was low, suggesting weak sales in the local market over the winter months.

For Craigavon/Armagh the overall average price of £129,208 was slightly down over a year by 1.9%, which was an improvement on the annual decline recorded in the previous quarter. Performance varied, with semi-detached houses showing the largest fall.

In Mid & South Down, the average price of £189,021 was well up, representing an 11.1% annual rise. However, not all property types improved, with terraced/townhouses and semi-detached houses falling back but detached homes and apartments rising.

ENDS

Notes to Editors:

TABLES           

             Performance by Property Type Q1 2010

 

Market sector

Annual change

Average Price

Terraced/townhouse

-2.3%

£123,023

Semi-detached house

-4.3%

£144,888

Detached house

20.7%

£292,852

Semi-detached bungalow

15.6%

£137,706

Detached bungalow

0.5%

£185,470

Apartment

2.4%

£142,959

                               Average house price by region Q1 2010


Location

Average Price

Northern Ireland -All

£169,497

Belfast - All

£183,498

North Belfast

£124,291

South Belfast

£219,187

East Belfast

£176,521

West Belfast

£161,703

North Down

£228,818

Lisburn

£164,367

East Antrim

£143,334

L'derry/Strabane

£137,298

Antrim/Ballymena

£174,965

Coleraine/Limavady/N. Coast

£155,343

Enniskillen/Fermanagh/S.Tyrone

£132,444

Mid Ulster

£140,435

Mid & South Down

£189,021

Craigavon/Armagh

£129,208


Media contacts:            

For University of Ulster: David Young, Press Office, University of Ulster +44 (0) 2890

366074/07808 911 343

For Bank of Ireland: Alan Watson or Stefanie Davidson, SMARTS +44 (0)28 9039 5500 or Julie Sherlock, Bank of Ireland +44 (0)28 9043 3520

For NIHE: Imelda McGrath or Jim Murray +44 (0) 28 9031 8700