Northern Ireland house prices set to grow by 5% as confidence returns to market
House prices in Northern Ireland are set to rise by 5% in 2016, according to industry experts.
The Royal Institution of Chartered Surveyors (RICS) said yesterday that a supply shortfall will continue to push property prices higher in the coming year.
Prices across the UK are predicted to rise by 6% while the cost of renting could grow by up to 3%.
Richard McCulloch from Stanley Best estate agents, which has branches in Belfast, Magherafelt and Cookstown, said: "I think these predictions are realistic and sensible because anything just above inflation allows first-time buyers to get on the property ladder, having been priced out for many years during the boom.
"I think if it continued at that level, everybody would be happy - both buyers and sellers. It also allows people to move up to the next rung of the ladder so on the whole, it's quite positive."
In recent years, a lack of houses on the market has pushed prices higher, but Mr McCulloch said this is starting to change: "In the last quarter, we have seen an increase in supply of around 20% compared to the same period last year, but buyer numbers haven't increased. I think that trend will continue next year as people will get confidence that the housing market is returning to normality.
"The demand is waning a little bit because people are realising that prices aren't going to shoot up so they are going to wait and find the right property."
Earlier this month, figures showed that the cost of buying a home had leapt by 10.3% in the year to October, making it the fastest growing region in the UK.
Prices here have risen faster than England, Scotland and Wales with average prices across the UK rising by 7% in 2015.
Mr McCulloch said: "I think this year was the first 'good year' after the crash and things were going to be even better than normal because things had been so bad in previous years. This year is more of a blip. I think next year it will return to normal levels."
He warned that changes to stamp duty could lead to price increases at the start of the year, but this should level out.
"In the first quarter of next year, there is likely to be an increase in house prices because the extra stamp duty is coming into effect for Buy to Let investors and they are trying to buy somewhere before April 1. That creates a bit of a frenzy," he said.
Simon Rubinsohn, RICS chief economist, said: "The lags involved in development mean that prices, and for that matter rents, are likely to rise further over the next 12 months.
"Lack of stock will continue to be the principal driver of this trend but the likely persistence of cheap money will compound it for the time being."
Regarding new builds, he said incentives were being put in place to deliver starter homes.
"While this may not on its own stem the upward trend in house prices, it could help to slow the rate of growth to something closer to the probable rise in household incomes."