The steady decline in house prices since mid-2007 is the result of the property bubble bursting, the impact of which has been felt across the board. But, if vendors are realistic they are likely to see good knock-on purchase prices.
We agree with the general consensus, highlighted by the majority of housing reports, that house prices have been on a steady decline since mid-2007. This is a broad generalisation that cannot accurately be applied to each and every region throughout Northern Ireland and is evident that in mid-2011 certain areas have had a stabilisation in prices.
Prior to 2007, house prices generally grew at a steady annual rate of say 3-5%. However, there were clear variations across the province with 'hot spots' that consistently saw more demand and growth than other areas as is now the case today.
The widely documented downturn in the housing market is the result of a market that was fuelled with readily available funding for properties based on high multiples of income, for both owner occupiers and investors. This encouraged many to buy property speculating on significant growth over the short term and led to growth never previously experienced in Northern Ireland.
When the house-price bubble burst in mid-2007, a decline in prices was inevitable which, combined with global economic issues and the banking crisis, saw an overall 'negativity' which has been experienced across all business sectors and resulted in fears of unemployment which continued to cause heightened anxiety in an already nervous market.
On average, house prices are down approximately 40% compared to the prices seen in early 2007. Similarly the number of transactions has also reduced significantly and is currently below even those seen in the early 2000s. The combination of a lack of confidence combined with difficulties in house buyers obtaining mortgages are obvious factors in whether or not a house sells, and that true value is rather more robust at current prices.
Vendors and purchasers might well ask when the decline is going to end and our company is of the opinion that prices are starting to bottom out in many areas. The Greater Belfast area and locations within a 30- minute commuting time of Belfast are the areas where vendors/developers are most realistic about pricing. Although house prices in rural and provincial areas may be back between 40 - 50% from the peak, the recovery period may be more protracted due to less demand.
However, the good news is that it is all relative and if vendors are prepared to be realistic about pricing, they are likely to see a knock-on realistic purchase price for their next step. This is highlighted by the fact that BTWCairns have had 310 house completions since the start of this year and at this moment have 440 properties agreed.