There is no doubt that Northern Ireland’s property market has plunged into a recession in the last year.
The authoritative University of Ulster house prices survey published just last month showed that sales in the second quarter of the year were down 50% on the same period a year earlier. Most property types, apartments aside, showed significant drops in value. In areas like the North West, Craigavon/Armagh and Fermanagh/South Tyrone, home owners saw 20% and more wiped off the value of their properties.
Exactly a year earlier the same survey was reporting that house prices had increased by 50% in the preceding 12 months. For a number of years the property market had experienced growth, fuelled by speculators and a heady feeling of optimism, which was unsustainable in the long term. The global credit crunch accelerated the slump when it came. Lack of confidence, a shortage of mortgages and the desire by many to see just how far the market would retrench led to the current situation.
Estate agents and developers, two groups of people not known for their generosity, suddenly had to be very inventive in a bid to stimulate sales. One developer slashed prices of new semi-detached and detached homes by £90,000 and £110,000 respectively and saw the properties snapped up. Whatever the economic conditions people still recognise a bargain.
Now there are two new initiatives which may be the catalyst for recovery in the property market. The Chancellor’s decision to waive stamp duty for a year on properties costing £175,000 or less – and increase of £50,000 on the stamp duty threshold – has
had an immediate effect on the local market with estate agents reducing the price of some properties to take advantage of the new measure. A saving of £1,750, especially for first time buyers, is a powerful incentive to purchase.
Another positive measure is the decision by the Social Development Minister Margaret Ritchie, along with two housing associations, a building firm and Barclays Bank to launch a reworking of the co-ownership housing scheme which allows buyers to purchase half the property initially and buy the rest when it becomes affordable. This, given the de
pressed state of the market, will make property owning viable even for those with relatively modest incomes and the partners in this initiative deserve credit for their invention.
The bottom line at the moment is that it is still a buyers’ market and that purchasers are seeking the best possible value for their money. However, the feeling is that the market may have bottomed out and that the only way is up.
Certainly, the initiatives taken by individual developers and estate agents, coupled with the raising of the stamp duty threshold and the new co-ownership scheme, should breathe more confidence into the market. There is even a suggestion that investors are being tempted back in because of the low prices. The construction sector is vitally important to the local economy and renewed vigour in the housing market would be keenly welcomed by house builders. But growth in the market, when it comes, is likely to be at much more realistic levels than was seen up until a year ago.