Housing market – Up, flat and down

Like the labour market, Northern Ireland’s housing market has been one of the best performing parts of the local economy. One key difference, however, is the housing market hasn’t captured the record highs and lows that the labour market has enjoyed.  Following the most significant property downturn in UK history, the scars are still apparent in the various aspects of the housing market. While many of the indicators point to significant growth over the past decade, the story is one of recovery has opposed to recovered.  

Up – prices still rising albeit at a weaker rate

The latest batch of housing market statistics reveal that the recovery has succumbed to a slowdown. Property prices are the housing market statistic of choice for small talk at dinner parties.  For the past seven years the chat has been of continued house price growth. However, the latest figures from NISRA reveal that the pace of growth eased to 2.5% y/y in Q4 2019. That’s less than halve the pace of growth recorded the previous year and marks the slowest rate of house price growth since Q4 2013. Nevertheless, the rise in local property prices still compares favourably with the UK (+1.6%) and the Republic of Ireland (+1.0%).

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Chart of the Month – Northern Ireland Home Ownership by Age

10 years ago Northern Ireland’s housing boom was turning to bust.  Back then the focus was on residential property price falls and the collapse in house building. Another less closely watched indicator, rates of home ownership, also plummeted. This trend was accompanied by a corresponding boom in the private rented sector which has more than doubled between 2006-2016.

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Three-in-a-row: NI notches up its 3rd year of house price growth

5474802142_e51c292c1b_bThis year will mark the tenth anniversary of Northern Ireland’s house price peak which heralded the start of a sustained period of collateral damage for the wider economy and not just the housing market. Residential property prices peaked in Q3 2007 and subsequently troughed in Q1 2013, down a whopping 57% some 5½ years later. Since then the housing market has been in recovery mode with three successive years of house price growth. For many homeowners the last ten years has represented a lost decade with aspirations blighted by negative equity. However, the combination of house price growth and time (assuming repayments) has seen the incidence of negative equity recede.

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