Ulster house prices ‘will keep falling into 2012’
House prices in Northern Ireland will continue to tumble into 2012 as the market attempts to settle after the boom of a few years ago, an economist has warned.
Ulster Bank chief economist Richard Ramsey said prices would ultimately fall as drastically as they had shot up between 2005 and 2007.
He spoke after a Nationwide survey showed prices in the province fell by 3% in the last three months of 2010. Overall, prices are estimated to have fallen by 7.6% over the year.
According to the University of Ulster’s house price index, the average house price here has now plummeted to below £150,000, its lowest level since late 2005.
That’s compared to the dizzying heights for the average house of £240,400 in 2007.
Mr Ramsey said: “We can expect the house price surveys to be still signalling house price falls on average well into 2012.
“I still expect Northern Ireland's house price correction to reveal a peak to trough fall in excess of 50%.
“As in the boom period, where house prices overshot, there is a significant risk of an undershoot on the way down. The average house price is around 40-45% below peak.”
Professor Alastair Adair of the University of Ulster said the market for 2011 was too volatile to predict.
Prof Adair, who is chairman of the Royal Institution of Chartered Surveyors in Northern Ireland, said differing trends with the UK would continue.
“We still have an overhang from the correction in prices following the massive rise in 2007, and England didn’t have that rise to the same extent,” he said.
“One would anticipate that correction is more or less complete — but that is where other economic drivers, such as the uncertainty we face, come into play.”
UK-wide, the Nationwide said the average price of a home in December was 0.4% higher than a year ago, at £162,763, buoyed by its first monthly rise since May.
Its chief economist, Martin Gahbauer, said: “At the moment, there are probably still too few buyers chasing too many properties.
“As a result, the slow drift down in house prices is likely to persist in 2011, at least for the first half of the year.”
Although prices rose 0.4% month-on-month in December, the longer-term picture was one of modest decline, he added.