The Northern Ireland housing market is in very good shape but supply challenge remains an issue
A year on from the Brexit result, the economy is probably in a better place than many had expected. There are certainly challenges now and challenges to come, but aside from perhaps a bit of a pause for thought, the Northern Ireland property market seems to have continued to perform reasonably well.
The latest RICS UK Residential Market Survey pointed to momentum continuing to ebb, with sales declining slightly over the month. Anecdotal evidence suggests that the calling of an early election may have created an added layer of uncertainty in the market. The effects of stamp duty changes last year are also still perhaps being felt.
In Northern Ireland, however, prices and sales continued to pick up, according to the RICS survey, with buyer interest also remaining strong.
On the supply side, the number of new instructions to sell rose for the third month in a row - indeed at the fastest rate in the UK. However, this is from a low base, and concerns around a shortage of supply persist, with new buyer enquiries continuing to rise at a faster rate than instructions to sell. This supply challenge has persisted in Northern Ireland for the past couple of years and has acted to push up prices.
An acute shortage of stock remains a key fact underpinning prices for the time being.
According to the NI Residential Property Price Index, Northern Ireland's standardised house price fell by 0.8% quarter-on-quarter to £124,007 in the first quarter of this year. This follows a marginal rise (+0.2%) in Q4 2016. Despite this decline, local house prices are still 4.3% above the same quarter a year ago.
The semi-detached market was the only property type not to post quarterly price falls in the first three months of this year, with prices remaining unchanged. The overall fall in house prices though conceals a divergence between new dwellings and the second-hand or existing homes. New dwellings fell by 4.5% in Q1 but this followed an increase of one-third in just over three years. Meanwhile, prices in the existing or resale market have been broadly flat for the last two quarters, rising by 0.2% in the latest survey.
Northern Ireland's annual rate of house price growth has halved from 8.7% in Q4 2014 to 4.3% in Q1 2017. This reduction in the rate of growth is almost inevitable though as the housing recovery continues.
According to the Council of Mortgage Lenders, lending is holding up well, but under the statistics buyers face mixed fortunes. Customers that are mortgaging and first-time buyers are driving total lending, whilst home movers and the buy to let market still face challenges with fewer properties coming onto the market.
Experts have warned of 'real tests' in the housing market in 2017 amid uncertainty over unemployment, inflation and the wider economy post-Brexit.
We traditionally see a significant upsurge or properties becoming available as the year progresses which in turn generates increased market activity. While there have been challenges, the first half of 2017 has been steady and we look forward to seeing what the rest of the year brings.
- Natalie Clarke is managing director of Natalie Clarke Residential and a member of the Royal Institution of Chartered Surveyors (RICs)