Belfast Telegraph

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How sun will shine again on our housing market

By David Elliot

A weather pattern of sunshine and showers is perfectly suited to the ebb and flow of recent business news stories.

While we bask in the warm rays emanating from new export deals and marvel at our newest inward investor the CME, we need an umbrella to protect ourselves from drizzle from the latest house price surveys.

That the average house price is down 53% on the peak in 2007 won't come as a huge surprise to many but it will be a bitter pill for those in negative equity to swallow.

But the darkest day is often before the dawn and quantifying such a large drop may be a figure we use to describe that darkest day in future.

That's not to say prices won't fall further - nobody can say for sure when it comes to the housing market - but with average salaries holding relatively steady over the same period of property meltdown then there is - whisper it quietly - at least some hope to be had.

That's because the most basic equation which has accurately gauged the oversold or overbought nature of housing markets across the world for generations reveals a more healthy balance in the Northern Ireland economy.

With average salaries standing at just over £23,000 a year it doesn't take a genius to work out that using a multiplier of three-and-a-half times brings you to a level of around £80,000, one where you can find plenty of houses priced.

Obviously that's very simplistic methodology and there are many more factors - such as the high level of deposit required by lenders, the growing dole queue - which will continue to drag on the housing market but there is a slight glimpse of light at the end of the tunnel.

It's not much, but it could at least see more first-time buyers coming forward, ones considered the kindling needed to relight the smouldering embers of the market.

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