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Confidence has returned to Northern Ireland’s housing market and the recovery is well entrenched, according to the latest Ulster University Quarterly House Price Index produced in partnership with Bank of Ireland UK and the Northern Ireland Housing Executive.

The survey covering the last quarter of 2014 put the average cost of a house at £143,675, equating to a weighted annual rise of 5.7% when variations in the sample mix were taken into account.

Compared with the previous quarter, the weighted increase was 3.3%.

The survey showed the volume of house sales in October, November and December remained strong, with 1,917 transactions recorded from the panel of estate agents across Northern Ireland, comparable to previous quarters in 2014.

The authors of the report, Professor Alastair Adair, Dr John McCord, Professor Stanley McGreal and Dr David McIlhatton from Ulster University, said: “With a weighted annual increase of 5.7%, the analysis of the last quarter of 2014 confirms the increasingly vibrant housing market.

“Significant rates of price growth have been sustained throughout the year and transaction volumes are at healthy levels compared to the pre-financial crisis period.”

Alan Bridle, UK Economist at Bank of Ireland UK, said: "The housing market is entering 2015 with some momentum, although there are variations specific to some areas.

“Despite the narrative of austerity, the steady recovery of the market should be underpinned by higher employment levels, a modest recovery in real incomes, strong competition in the mortgage market and the changes to stamp duty announced in December.”

Although prices have been recovering steadily, the report points out that the local market remains highly affordable. The proportion of properties sold at or below £150,000 was unchanged on the previous quarter at 69% of the sample, the authors said.

The Housing Executive’s Head of Research, Joe Frey, said: “The analysis of the data for Quarter 4, 2014 provides further evidence of recovery in Northern Ireland’s housing market, but this recovery has varied very significantly between local housing markets. A more buoyant labour market will be the key factor which will determine the rate of recovery going forward.”

Property Types

Both on an annual and quarterly basis, all types of property showed an increase in average sale price, demonstrating the buoyancy of the market.

Semi-detached bungalows, which take a small share of the survey, saw the highest rate of annual growth at 17.6% to £103,486. Semi-detached houses, in contrast, rose by 3.6% to £129,827.

Detached houses performed well, up 6.7% to £237,669. Detached bungalows increased 2.5% to £157,241; terraced-townhouses rose 2.9% to £86,153 while the average price of apartments went up by 13.3% to £108,912.

Regional performance (see table)

Although there was some variation, the rise in prices for Northern Ireland as a whole was reflected in most market areas.

The Belfast market again performed strongly in the last three months of 2014, with an average price in the city of £156,712, up by 14.5% over a year but by a more modest 1.5% over the quarter.

South Belfast remained the most expensive area for housing, with an average sale price of £204,499.

House Price Index

The long-term House Price Index, calculated relative to the base quarter for the survey in the final quarter 1984, rose substantially in Quarter 4, 2014 to 518.47.