Price of houses dropping
7% dip after summer slump
Northern Ireland house prices have hit a summer slump after months of breaking new records.
Industry sources have told the Belfast Telegraph that those who bought a house four months ago could have lost money in the current market, sparking fears of negative equity. And one Ulster estate agent claimed that another interest rate rise could hammer house price growth down to nothing later this year.
A combination of the recent overheated market, rising interest rates, more new houses being released and a seasonal lull have been blamed for house prices falling by up to 7% in some cases.
Northern Ireland estate agents say the record-breaking house price growth experienced earlier this year has steadied, although there is optimism the market will rally after the summer slowdown.
Des McGranaghan, of McGranaghan Estate Agents in west Belfast, said: " We estimated there has been a reduction in house prices in some areas of 5-7%. The last year saw increases in the same areas of 40-50% over the previous year."
And he claimed the slowness of the current market is as a result of interest rate rises, now at 5.75% - but hotly tipped to top 6% later this year.
"Potential home-owners may not now be able to afford higher repayments from their income," he said.
The estate agent said this, along with the traditional holiday season, has also impacted on house sales.
He predicted, however: "The autumn should see regained confidence in the market, and growth of around 8% is expected by next March."
And Derek Wilson, Ulster Bank head of mortgages, agreed that the market is in a state of flux but added that it could be good news for first time buyers.
"Any profit-taking on the part of property investors could mean that first-time buyers will have more choice, but since affordability remains a big issue, any further increases in interest rates could conceivably result in no house price growth in the short to mid-term."
The most recent Ulster Bank-backed house report by the Royal Institution of Chartered
Surveyors showed a slowing of house price inflation from April.
Larry McAllister, office manager at Goldsmiths Estate Agents in west Belfast, said: "Gone are the days of making 50% profit. It is a buyer's market now."
And he said some sellers are having to accept offers below the asking prices. "Things are slowing down here and those people who bought four months ago are making a loss at today's market price. People now have to take a medium to long-term view."
And the previously bullish Ulster housing market has been dealt a double whammy with both first-time buyers and investors priced out, according to Mr McAllister.
"If interest rates come down in the New Year, that might give people the confidence to come back into the market again," he added.
Colin Barkley, managing director of Brian Morton & Company, said July has been "quiet". He said the speed at which house prices accelerated here last year was unsustainable, but added that houses are priced more realistically now. "Twelve months ago the asking price was irrelevant as you would be selling for £15,000-£20,000 over," he said.
Despite the summer slowdown, he added: "There are still houses coming onto the market and people out there wanting to buy."
While Jonathan Watson, director at MCW Residential in east Belfast, pointed out it is a great time for buyers. He said: "You have a better chance of getting a house for the asking price now than five years ago and the shrewd investor is still buying."