House prices fall as experts point to ‘erratic’ signs
Northern Ireland’s housing market is showing erratic and uneven behaviour according to a major survey.
The overall average house price dropped by 2.5% between April and June compared to the first quarter of the year, the University of Ulster Quarterly House Price Index reveals.
Yet over the previous year there had been an annual weighted rate of price growth of 2.4%.
The survey put the overall average price of a house in Northern Ireland for the second quarter of 2010 at £163,459.
The Price Index is produced in partnership with Bank of Ireland and the Northern Ireland Housing Executive.
According to the report’s authors, Professor Alastair Adair, Professor Stanley McGreal and Dr David McIlhatton, the findings highlight the erratic and uneven behaviour of the current housing market.
“On the positive side the small rate of annual price growth and the higher volume of transactions are welcomed signs,” they said.
“However, the weaker price performance during the spring quarter suggests that recovery of the housing market is fragile.”
The price statistics are based on a sample of 1,009 transactions in the second quarter of 2010 — larger than that for the first quarter of the year, which suggests a pick-up in transaction volume during a traditionally active quarter for the housing market.
The report uses a weighted index to even out fluctuations in the sample composition.
While the simple average price increase is 2.9%, the weighted increase over the year in this survey is 2.4%.
Economist Alan Bridle, head of economics and research at Bank of Ireland Northern Ireland, said: “While recent evidence may indicate that average prices have returned to a more sustainable level, the impact on the housing market of impending spending cuts and budgetary restraints in Northern Ireland suggests the price risks are still to the downside.
“There is now a realism that a recovery to pre-crisis levels will only occur over an extended period of years.
“The sluggish trends in the house-buying market continue to mirror developments in the private rental sector, which has experienced a rapid expansion.”
The survey indicated that the market is becoming increasingly affordable, with 61% of properties selling at or below £150,000.
The Housing Executive’s Head of Research, Joe Frey said the latest analysis confirms that the housing market will remain flat for some time to come.
“An additional less obvious concern, however, is the impact of the new Government’s proposals for restricting Housing Benefit. These could have a very detrimental effect on both tenants’ ability to afford to live in the private rented sector and landlords’ ability to charge viable rents,” he said.