Belfast Telegraph

Belfast house price fall is UK record

By Claire Weir

House prices in Belfast have slumped by 19% in the past year - the worst slide of any city in the UK.

And Northern Ireland was named worst performing region in the Nationwide Building Society survey for the fourth year in a row, with house prices averaging £113,614 a property - around half the peak prices seen in 2007.

The average house price to earnings ratio here is now 4.1, down from 9.2 in 2007.

In contrast, nine out of 13 regions in the UK recorded a house price rise over 2011, including a 5.4% increase in London.

Estate agent Tom McClelland, Northern Ireland spokesman for the Royal Institute of Chartered Surveyors, said that circumstances which led to the boom may not be seen for another five decades.

He said: "The 2007 peak was caused by a number of factors which are unlikely to be repeated in the next 50 years. There was a combination of easy access to debt, bizarre financial products like interest-only loans, an aspiration that prices would always rise and the fact that we were sheltered from the boom and bust seen in England in the 1980s.

"We also saw a surge in the buy-to-let market to accommodate an influx of immigrant workers."

Professor Paddy Gray, professor of housing at the University of Ulster, said that the decline seems to have matched the major rise of house prices in Northern Ireland seen between 2004 and 2007.

"With the steep rise in prices that we saw over three or four years, it is no surprise that we have seen an equally sharp fall and it has been predicted," he said.

"People, especially young people and first-time buyers, are being extremely cautious and are waiting for the market to bottom out.

"The issue with the banks is another factor - very few are lending and the deposits needed for mortgages are now huge.

"People use the term bottoming-out a lot, but who knows if the prices will sink lower again.

"There is a lot of pent-up demand, and when banks start to relax lending, when prices recover, there may well be another surge.

"But I think lessons have definitely been learned from this drastic boom-and-bust cycle, and who knows if prices will ever soar to the place they were at the height of the boom any time soon."

Background

Our house price crash is one of the worst in the world, according to some experts. Property research firm Hometrack found that in Northern Ireland between January 2002 and September 2007 prices rose by 165%, more than any other UK postal code area. Prices hit an average £234,500 by September 2007, more than double average values just three years earlier. Since then prices have nosedived. Mortgage account manager HML predicts the highest rate of repossessions in the UK in 2012.

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