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Why buying houses is just like Monopoly... there are winners and losers

After the boom came the shocking crash. As house prices start to rise again, Stephanie Bell talks to three people who have startling tales to tell about how the property market impacted on their lives.

News this week that house prices in Northern Ireland have risen by up to 9% in the first half of the year is a welcome break for the market, home owners and the economy.

While it was the biggest increase of any region in the UK, our property values still remain the lowest and are still 42.7% below their peak during the property boom.

The average price of a house now in the province is £154,000, according to the latest figures from the Office for National Statistics.

Property prices here took a sharp nosedive during the downturn in the market and are still catching up with those in other regions. The UK average price is £277,000.

However, the report said that prices here are continuing the consistently strong pace of growth seen since mid-2014.

While prices bottomed out and are now on the turn, the terrible fallout from the crash in the market is still being felt by many thousands of people, who are struggling with negative equity. Thousands more have had to cope with having their dream homes repossessed.

However, a sustained upturn in the market can only lift the spirits of those sitting with properties worth less than their mortgages.

We spoke to three people about the impact of the downturn on them and what it means that the market is now on its way up again.

Jamie Burton (29), from Banbridge, is a branch manager with Robert Wilson Estate Agency in Lurgan and also a first time buyer. Jamie naturally welcomes the increase in prices, but has professional as well as personal reasons for doing so. He says:

Personally, I would have found it very difficult as a single person to get on the property ladder if the prices hadn’t fallen. When the market was at its peak I had no chance of buying my own home.

I bought my first house in December 2012 and it was a three bedroom, modern town house which had been repossessed.

When I bought the property I got it at 65% of the outstanding mortgage and it has gone up in value since then, so I’ve been very lucky.

I started work as an estate agent in 2003, when property prices were rising normally and I have worked through the boom and the crash.

It has been very difficult as an estate agent. I sold property to people who have been left nowadays with 50% or more negative equity.

Personally I find that very, very hard, knowing that I sold it, even though I knew that at the time that is what the house was worth.

Most people who bought between 2005 and 2007 will be in negative equity.

In fact, this morning I visited a young couple who paid £220,000 for their house and it is on offer today at £90,000. It is dreadful.

Even the boom was tough. We had properties which started the week off valued at £180,000 and there would have been so many bids that by the end of the week it would have shot up to as much as £230,000.

As estate agents we were probably a bit lost during the boom time, as we couldn’t control anything.

We could have had 15 people bidding on any one property. Such was the demand, that people were just coming out of the woodwork.

The downside though was horrendous. We went from selling 30 properties a month to struggling to sell three.

The phone calls were non-existent and we couldn’t get viewers. The only calls we were taking were from vendors wanting to know why they had no viewers.

We had real trouble trying to persuade people to drop their prices, as they were still aware of the big prices property was going for during the boom and so were reluctant to drop.

It has only been in the last year that things have picked up and we have had a lot more activity.

At the minute I am sitting with 10 files on my desk, all of which have offers over the asking price.

As a new home owner, I am relieved to see prices rising, but also as an estate agent it is good to see, because of the confidence it has brought.

I have really seen the difference the price rises have made in the Lurgan/Craigavon area, in particular.

Prices here were hit hardest during the downturn and this was one of the worst affected areas, but thankfully it has been one of the first to see an increase, too.

It is good to see young married couples — who during the boom couldn’t have bought a house and who thought they would never be home owners — now able to get onto the property ladder.

This week’s rise is great. It is based on fact and you cannot argue with facts.”

David Young is a freelance journalist and former public sector PR professional. He lives in Whitehead. He says:

I’ve never been a fan of house price inflation.  You can’t sustain an economy on people selling houses to each other. If the price of my house goes up, so does the price of the houses you might want to buy. So where’s the benefit?

In the grand scheme of things there isn’t any — but that doesn’t mean some people don’t just get lucky, and are carried along on the rising tide. I am one of them.

My wife and I bought our first house back in 1990, a small terrace. It was all we could afford, and I was never one for taking out big mortgages. I hate debt. I can’t sleep if I owe money to anyone. We had to take out a loan to buy on that first little house, but we were both working and we paid it off as soon as we could.

A decade and a half later, we’d outgrown it. Our mortgage was long paid off, and we both had reasonably well paid jobs in the public sector. We wanted a garden, and room to have dogs. We began to look at houses in the countryside.

The mid-2000s were when house price inflation really took off in Northern Ireland. We were astounded when we were told that our little terrace house had quadrupled in price, due to intense demand from first time buyers desperate to get on the property ladder.  We didn’t live in a swanky area, by any means. But it was popular, close to Belfast and an easy commute: we were glad to get the price.

We used the money to buy a semi on a country lane, with a big garden. It was cheaper than we expected. And we soon found out why. The countryside is industrialising — and is much, much noisier than you’d think and between the slurry spreaders,  the midnight tractors and the increasing number of misguided satnav lorries spewing diesel fumes into the garden, after ten years we decided that it was time to move back to a town.

When I was a little boy growing up in a rufty-tufty south Antrim housing estate, I’d visited Whitehead on my bike: it seemed idyllic to me, and I wondered what kind of people lived there. Turns out, it’s people like me.

Today, I live in a double fronted Edwardian semi in the quiet  little seaside town, bought without a mortgage, thanks to the proceeds from the sale of our country lane semi  — plus two years wages worth of  the saving we’d salted away over the decades. Instead of muck spreaders and diesel fumes, there are church bells and  the cry of seagulls.

House inflation was good to me: it helped me into a lovely house in a place I had always had a liking for.

I suppose I can’t complain too loudly.”

William Gilpin, a builder from Bleary, was put out of business by the downturn, but now that prices are on the up again he is back building new properties at Hazelgrove Avenue in Lurgan. He is married to Liz and they have four grown-up daughters and six grandchildren. He says:

I’ve been building for 25 years. I found during the Eighties and Nineties the property market wouldn’t have been vibrant but was steady.

The peace dividend saw demand start to grow as more people were confident about moving to different areas to live.

We were very far behind prices in England, but suddenly our prices began to rise.

Money also became freely available and I still don’t know how banks were able to offer 125% mortgages.

People could borrow what they wanted and builders were trying to meet demand, but when we went into the boom period, builders had to pay a premium for land if we wanted to continue to build.

These private investors who were not builders were buying land and the prices just shot up.

Land which would have cost £150,000 an acre had risen to £1m an acre within a year to 18 months.

Unless you had a land bank of your own, you had to pay a premium for land or go out of business.

In April 2007, when the bubble burst, it was like a light switch going off. Any business there was just died on us.

We got to the stage when we had to stop building. For five to six years there was nothing. It all died down and I had to close my business and for four years I did nothing.

It is only as prices started to pick up in the last 18 months to two years that I have been building again.

I think when people saw prices had reached rock bottom the market started to pick up again and we are working  to keep our prices down.

I have a mix of two-storey semis, semi-detached bungalows and bungalows. I’m not a volume builder and have put about 12-14 up in the past two years.

The problem for us with the house price rises is that suppliers are putting their prices up, as they suffered, too, and are trying to claw back what they can.

We are trying to keep our prices as low as possible and it means there is a very small margin of profit.

I would prefer to see demand going up rather than prices, as I would be worried that price rises could slow the market down again.

We’ve pulled our prices back to the bare bone.”

Average prices are now back to 2005 levels

House prices in Northern Ireland have returned to 2005 levels, with prices rising by 3% between the first and second quarters of this year and now sitting at 6% higher than they were a year ago.

Prices rose in all council areas over the quarter, except Londonderry and Strabane, where they were unchanged.

Between 2005 and 2007, Northern Ireland house prices doubled, before collapsing and finally bottoming out in early 2013.

Since then the market has been gradually recovering.

There were also variations among property types, with detached and semi-detached houses now 7% above 2005 levels, while apartments are still 11% below and terraces 6% below.

The highest prices are in North Down and Ards, the lowest in Londonderry and Strabane.

The figures produced by Nisra, Stormont's statistics agency, are considered the most accurate guide to house prices in Northern Ireland.

They are based on all verified residential properties sales as recorded by HM Revenue and Customs.

They show that more than 4,600 houses were sold during the second quarter of this year.

The most expensive place to live is North Down and Ards, where the average house costs £135,988, up by 5% in a year, closely followed by Lisburn and Castlereagh at £135,977.

Property prices are lowest in Londonderry and Strabane, where the average cost of a home is £93,806.

House prices rose the most in Mid Ulster, where the average home now costs £114,132.

Armagh, Banbridge and Craigavon Council area is also among the cheapest places to buy, with average prices sitting at £98,814.

In Belfast, the average cost of a house currently is £107,442, up by 6% in a year.

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