Northern Ireland Property market continues its freefall

Northern Ireland’s price freefall continued during the last quarter.  The average price of a home in Northern Ireland in the last quarter was £128,846.  That is the lowest since the end of the first quarter of 2006 when the average price was first quarter in 2006, the average price was £129,346. 

Meanwhile, in the UK, as a whole, prices continued their upward movement, which began at the beginning of last year.  I have charted the progress of UK and Northern Ireland house prices in the graph belowLast year, I forecast that house prices in Northern Ireland would fall but flatten out by this time. That was also the forecast for the UK market made by Savilles which is shown in my earlier graph. Whereas that Northern Ireland market has continued to fall, the UK market has gone in the opposite direction. So much for forecasting then. 

These figures prove almost conclusively that the Northern Ireland property market is primarily influenced by the market in the Republic of Ireland, which continues to fall.

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7 Responses to Northern Ireland Property market continues its freefall

  1. Interesting comparison. Is NI influenced by the property market in the ROI, or are they both influenced by common factors? Correlation ≠ causation and all that…

    • Seymour Major says:

      Andrew,

      I dont profess to be the strongest expert to answer that question but being somebody who was handling conveyancing work in England and then in Northern Ireland since 1999, I can say the following with reasonable authority.

      The Northern Ireland property market did not benefit from the 1980s property boom in the rest of the UK. Earlier tables, which I have not displayed make that clear. It was believed at the time that the ‘troubles’ played their part in that. When the UK boom ended, the UK reverted back towards its original trends and the NI market appears to have been shadowing the UK market consistently throughout the 1990s.

      From the mid 1990s, property took off in ROI and very soon there was a huge disparity in the prices between ROI and Northern Ireland. In 2000, I wrote an article in the local paper in Monaghan (the Northern Standard) in the hope that investors would be interested in buying in the North. I compared the huge diversity between prices in the North and the South. Even then, the difference in price of an average home was about €100,000

      Throughout the 2000s property boom in ROI continued but the market in NI only rose steadily, precisely in line with the UK – until early 2006. At that point, the NI market went mad and that is where the ROI investors started entering the NI market in droves. The 2006/7 bubble which you see in that graph was like a market supernova and is clearly as a result of the influence of the ROI market.

      Many homeowners in NI are now in negative equity. Negative equity does not affect people who live in their property, provided they dont want to move / raise capital and are able to pay their mortgage.

      In fact, some of the price fall we are seeing now is party due to reaction to the downward trend, creating a new spiral. First time buyers will not buy because they think the market has further to fall. People who can not sell will try and rent their property. This will increase the supply of space to live in and probably depress the market further.

      There is no sign of a pickup in the ROI property market and all of this is before the spending cuts in NI start to kick in and bite with the consequent job losses and many people who cant pay their mortgage going bankrupt. The short and medium term outlook for the property market is rather bleak.

    • Seymour Major says:

      Andrew,

      One more thing. Every cloud has a silver lining.

      If I was the Government, which wants to see more investment in NI, I would now be pushing its plans for a regional development zone right up the political agenda.

      Of course, the Government needs co-operation from politicians in Northern Ireland for some of its measures, including the proposed lower corporation tax. If it can secure that co-operation, then the The low prices in the property market and the prospect of a lower corporation tax rate, ironically, now make it a very good time for big businesses to invest here.

    • I think both are influenced by common factors. However, ROI is even worse

  2. I find it hard to believe that the property market in Northern Ireland is affected by the Republic, the U.K market is in a state anyway.

    Gavin Moore

    • Seymour Major says:

      Conveyancing,

      My own view is that Northern Ireland is affected by both markets. At different times, the influence of each market affects the NI market to different degrees. In the last quarter to end of September, which I have not yet posted about, the UK market has fallen again, giving rise to the prospect of a double dip recession in the main economy. NI, on the other hand, has stopped falling and has very slightly risen.

  3. selfbuildni says:

    only time will tell.hindsight would be worth buying in a bottle.

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