Belfast Telegraph

Thursday 30 October 2014

Turbulence recedes as house prices stabilise

Rise of 2% for all property types a promising sign

Rachel Burgoyne and her daughter Hannah
Rachel Burgoyne and her daughter Hannah
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House buyers in Northern Ireland were offering more than nine times their salaries for homes before the 2007 property crash, it has emerged.

However, a sustained downturn in the market means that people are now spending just over four times their wages on somewhere to live.

Economists have said that, while that level of spend isn't exceptionally low, it is at least approaching what is thought to be the 3.5 ratio norm.

The figures were revealed in the NI Residential Property Price Index (RPPI), which also showed a 2% price hike across all house types between the first and second quarter of 2013.

That represents the first time that the value of all dwellings – detached, semi-detached, terrace and apartments – have increased since 2007, although prices are still 3% lower than this time last year.

Finance Minister Simon Hamilton said the official statistics were an indication that the Northern Ireland market was starting to settle down.

"This publication is now recognised for providing the most comprehensive picture of our local property market," said Mr Hamilton.

"It is promising to note that this is the first quarter since 2007 that an increase has occurred and it confirms that the property market here is beginning to stabilise.

"Over the long-term, the index shows that the local market has rebalanced with prices at pre-2005 levels."

Data from the Northern Ireland Statistics and Research Agency (NISRA) has put the standardised residential property price for all types of home at £96,327 during the three months ending in June.

Detached houses were worth £153,063 and terraced £62,690, while semi-detached properties sold at £95,903 and apartments went for £76,884.

In the second quarter of 2013, the most rapid rise in price was in the north of Northern Ireland at 6% (Ballymoney, Coleraine, Londonderry, Limavady, Moyle and Strabane).

The NI RPPI report showed that, based on the figures available, the ratio of median house prices to earnings has changed from over nine times the median annual gross full-time earnings in 2007 to just over four times in 2012.

Alan Bronte, commissioner of valuation for Northern Ireland, acknowledged Northern Ireland's negative equity problem, where one in three homes is worth less than it cost, meaning a sale won't pay off the mortgage.

"There remains a problem for a sizeable group of people, a concern for the economy and a concern for the market that there is negative equity," he said.

"But we don't wish to see prices go straight back up again to bring people out of negative equity at the level that they were rising in 2006-7."

Economist John Simpson said that during one year of the "crazy boom" house prices rose by 50%.

"We've lived through a four or five-year period when collectively we engaged in housing madness, but we have now come back to normal," he said.

"House prices haven't fallen in the past couple of years. They've simply moved back to where they should be.

"We've now got house prices which are better in line with income and what's happening elsewhere."

FACTFILE

Key results from the NISRA survey of all house prices based on stamp duty and land tax showed:

* Between quarter one (January to March) this year and quarter two (April to June) residential property prices increased by 2%.

* Prices increased over the quarter across all property types, the first quarter since April to June 2007 that this has happened.

* Because of falls between July last year and March this year, prices fell over the year by 3%.

* The residential property price index for Northern Ireland peaked from July to September 2007.

* Prices today are under half their peak value – a 53% fall.

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