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NI Housing Market Subdued, But Affordability Improving - Ulster Report

9 February 2012

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The number of house sales in Northern Ireland continued to show a rise in the final quarter of 2011 although prices were generally still falling, according to the latest University of Ulster Quarterly House Price Index produced in partnership with Bank of Ireland and the Northern Ireland Housing Executive.

The survey, released today, showed the number of transactions in the fourth quarter of 2011 – October, November and December - was 960 compared with 684 sales in the same quarter in 2010.

The figure is lower than the previous two quarters of 1,133 and 1,062 respectively, reflecting the quieter winter sales period, but a significant improvement on the year suggesting that the limited market recovery in terms of sales had not stalled.

The overall average price of a house in Northern Ireland for the fourth quarter of 2011 was £137,219 representing a weighted rate of annual decline of 10.7%. Quarterly performance was also weaker, with a weighted price decline of 2.6% in the final quarter.

The authors of the report - Professor Alastair Adair, Professor Stanley McGreal and Dr David McIlhatton - said:

"The Northern Ireland housing market has closed the year in much the same way as it started. Although the market is showing some tentative signs of stabilisation, it is still rather thin in terms of transaction levels with average prices tending to be lower rather than higher.

This survey shows that recovery in the Northern Ireland housing market is still not deeply embedded and remains vulnerable to economic circumstances and to the seasonal vagaries of the market which become more apparent during periods of thin market conditions,"

Alan Bridle, UK Economist at Bank of Ireland UK, said:

“This year offers more of the same pattern as many households continue to face economic and financial headwinds that will inevitably constrain demand for house purchase and house finance. The prospects for higher activity levels look brighter for spring and summer, in line with seasonal trends.”

The Housing Executive’s Head of Research, Joe Frey, said:

“New research confirms that the private rented sector is continuing to expand and play an ever bigger role in meeting the accommodation needs of a growing number of potential first time buyers and households on low incomes. There is a growing concern among housing professionals that the changes to the Housing Benefit system currently being introduced on a rolling basis could seriously undermine this role at a time when resources for new social housing are being reduced”.

The survey, which covered some 115 firms of estate agents, showed that 35% of properties sold at or below £100,000 compared to 29% in the previous survey, while more than two-thirds of properties (68%) sold at or below £150,000, highlighting the lower price structure in the market.

Property Types

On an annual comparison between quarter four 2011 and the same quarter in 2010, price levels were lower across the market, with the exception of semi-detached bungalows which saw an increase of 6.7% in average sale price over the year. All other market sectors saw reduced average prices with apartments seeing the greatest decline of 23.8%; detached bungalows fell by 16.4%; detached houses dropped by 15.3%; terraced/townhouses fell by 3.4%; and semi-detached houses decreased by 2.6%.

Regional performance

At a regional level, the picture is similar to that for the overall Northern Ireland market with average prices continuing to be lower and variable. There were some exceptions, notably South Belfast, Lisburn and Mid & South Down. Lisburn performed better than the overall Northern Ireland market although the picture there remained variable across property types. South Belfast had the highest priced housing in Northern Ireland while North Belfast was the most affordable area.

House Price Index

The long-term House Price Index, calculated relative to the base quarter for the survey in 1984, declined in the fourth quarter to 502.47. The authors said this reflected the more difficult market conditions during the final quarter of 2011.