House prices continue to rise but activity on the turn?

Northern Ireland Residential Property Price Index Comment

Northern Ireland’s housing market has been a source of continued positivity in recent years, with housebuilding, prices, transactions and mortgage activity all at multi-year highs.  Though the property market remains in recovery mode, rather than recovered, following the biggest residential property downturn in UK history.

Residential property price growth has been slowing in both the UK and Republic of Ireland markets. The latest Residential Property Price Index for Northern Ireland points to a similar trend. Residential property prices posted their first quarterly fall in two years in Q1 2019 with a 1.0% decline.  Annual house price growth eased from 5.1% in Q4 2018 to a more sustainable 3.5% in Q1 2019 – a rate that remains above consumer price inflation and broadly in line with average earnings growth. Lower rates of house price inflation (2-3% p.a.) are to be welcomed.

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A low but not quite the labour market nirvana it suggests

When analysing economies the world over, the unemployment rate is arguably one of the most important go-to statistics. It enables comparisons to be drawn and inferences made on the relative health of different economies. Today’s labour market statistics revealed that Northern Ireland’s headline unemployment rate fell to a jaw-dropping low of 2.9% in Q1 2019. This represents the lowest unemployment rate on record and the joint-second lowest of all the UK regions. Not only does it compare favourably with the UK (3.8%), but it is also below the likes of the United States (3.6%), the Republic of Ireland (5.4%) and Germany (3.2%). Japan is one of the few world economies with a lower unemployment rate (2.5%) than Northern Ireland.

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When China sneezes….

The old saying is that the US economy sneezes and the rest of the world catches cold. This phrase reflected the old influence and dominance of America in the global economy. However, since the worldwide recession a decade ago, China has had a spectacular rise and is challenging US hegemony. Indeed, the concerns now are about the Chinese Dragon spreading its economic germs.

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Farming takes centre stage but plenty of drama is unfolding in the background

In Northern Ireland, farming always takes centre stage during May, when all of the sector’s actors come together for the biggest show in town. Balmoral provides the opportunity to reflect on the performance of the industry since the last show and to look forward to the seasons ahead.

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Q1 fails to ignite for car market

New car sales have started 2019 the same way as last year, according to the SMMT figures for Q1, with a drop in new registrations. While the number of new cars sold in March held up relative to a year ago, the quarterly total of 16,676 was still down 3% (524 fewer vehicle sales) below the corresponding quarter in 2018.

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Have consumers priced in Brexit?

There is an annual cycle in consumer finances. January, February and March are generally lean months for spending as wallets and purses recover from Christmas. The second quarter of the year sees preparation for the holidays, before a post-summer recovery. Spending then accelerates again, due to the end of year festivities, before the cycle repeats.

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How will moving out of EU impact the housing market?

There has been a steady stream of negative news of late about consumer spending and consumer confidence. The latest car sales figures for Northern Ireland reveal that last month was the quietest for car showrooms in eight years. Meanwhile retail sales fell at their fastest pace in almost four years in February, according to the Ulster Bank PMI. And talk of food shortages and potential tariff-induced price rises if a no-Deal Brexit comes to pass will have done little to boost consumer sentiment. However, despite all of this, when we look at figures in relation to housing – the biggest discretionary consumer spending item of all – they appear to be at odds with everything else that is going on.

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Cranes, drains and car lanes…

When you walk around the city, there are many very visible things that can give you a clear indication of how the economy is performing. The number of cranes in the skyline is perhaps one of the most obvious ‘finger in the air’ indicators; but other visual evidence includes the number of vacant shop units, the instances of sale signs in shop windows, and the number and types of new cars on the roads. But less obvious things are perhaps as important in understanding the economy, such as what the cranes are actually building, or things under the surface, such as the state of our infrastructure.

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Time to put purpose before profit?

2018 will go down as the year of the backstop but it could also be dubbed the year of skills shortages, particularly in sectors such as hospitality and IT. In 2019, it remains to be seen whether the backstop comes into being, but one thing that is for sure is skills shortages will remain a feature and persist throughout the next 12 months and beyond.

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