Northern Ireland house prices to rise in spite of UK gloom

Northern Ireland’s housing market is set for a year of growing sales and prices despite some unfavourable conditions, according to a survey today.

The latest research by the Royal Institution of Chartered Surveyors (RICS) and Ulster Bank said the province’s housing market was entering 2018 on a “firm footing”.

However, it added that factors, such as a possible further rise in interest rates, and political uncertainty, could hit growth.

Estate agents who took part in the RICS survey said prices had gone up again in December. However, there were more inquiries from prospective buyers than sellers during the month, suggesting a continued gap between supply and demand.

According to the latest Office for National Statistics (ONS) figures, average house prices here are now £132,000 – a rise of 6% year-on-year and the highest of the UK nations.

And RICS members have said they expected house prices here to grow between now and the end of 2018.

However, NI members did not expect a substantial increase, although their belief prices would go up at all made them among the most optimistic in the UK.

Overall, the Northern Ireland housing market appeared to be in a more robust condition than the UK as a whole, where RICS said interest from buyers was waning.

Surveyor Samuel Dickey, of RICS, said: “Surveyors appear confident in the near-term outlook for the market in Northern Ireland, with interest from potential buyers evident, and the gap between supply and demand likely to put some upward pressure on prices.

“Looking further ahead, clearly there are some challenges expected on the political front, alongside a potential squeeze on consumers due to inflation and further potential movements in interest rates.

“However, despite some uncertainty, surveyors expect both prices and sales activity to be higher in a year’s time.”

Sean Murphy, managing director of personal banking at Ulster Bank, said: “Clearly the Northern Ireland housing market enters 2018 with good momentum and relative optimism for the year ahead, and our own expectation is for good mortgage demand from home buyers, movers and those remortgaging.”

Mr Murphy said that the RICS survey chimed with the positive outlook for the economy in 2018 in the bank’s latest purchasing managers’ index.


First Time Buyers set to become largest buyer group in 2018

According to the latest data and anlysis from Hometrack, first-time buyers will overtake homeowners to become the largest buyer group next year, accounting for a 35% share of all sales.

Although first-time buyer numbers have fallen by 10% in London over the last three years as affordability pressures limit access to the market, Hometrack predicts numbers to grow in regional housing markets where affordability is more attractive.

Regional markets are also expected to offset weak house price growth in London, and could register house price rises of up to 25% over the next 2-3 years, Hometrack says.

The likes of Manchester, Birmingham and Glasgow have seen market activity increase and this has delivered above average price growth of 6-8% for the last 12 months.

A year ago Hometrack was at the optimistic end of forecasts for house prices in 2017 projecting an increase of 4% on the basis of a continued pick-up in regional housing markets offsetting weak price growth in London.

Twelve months on, the firm says it expects 2018 to follow a similar pattern with the UK’s top 20 cities forecast to register house price growth of 5% next year. For the UK as a whole Hometrack predicts house prices will increase by 3%.

Richard Donnell, Insight Director at Hometrack, commented: “Housing sales have been stuck at 1.2m for the last 3 years and we don’t expect this to change over 2018. Sales volumes have been falling in south eastern England and are down 16% in London since 2014. However, first time buyer purchases have been taking a growing share of sales.

We are currently ‘half way’ through the current housing cycle that started in central London and is now spreading further afield as the economy grows and mortgage rates remain low. London house prices are up 70% since 2009 but affordability levels are stretched to an all-time high (14x earnings) with sales volumes down and house price growth (+2.9%) failing to keep pace with inflation.

London is facing a drawn-out period where house prices and earnings need to re-align – we expect the rate of house price inflation to remain in low single digits over the course of 2018 with prices falling in real terms.”


House prices grow 2 per cent in Northern Ireland to £131,989 says Nationwide

HOUSE prices ended 2017 some 2.6 per cent higher than when the year started, with London identified as the UK’s weakest-performing region for the first time since 2004, according to an index.

Across the UK, the average price was £211,156 in December, marking a 0.6 per cent month-on-month increase as well as the 2.6 per cent annual uplift, Nationwide Building Society said.

In Northern Ireland the average price, at £131,989, was up just 2 per cent over the year.

The overall annual UK rise was the slowest for any calendar year since 2012. It compares with a 4.5 per cent annual increase in December 2016.

For the first year since 2008, prices in northern England and the Midlands combined grew at a faster rate than in southern England, Nationwide said, with a 3.6 per cent year-on-year increase compared with 1.6 per cent.

In London, prices were down 0.5 per cent annually, taking the average to £470,922.

The strongest-performing region was the West Midlands, with prices up by 5.2 per cent annually, followed by the South West at 4.8 per cent.

An increase of 3.3 per cent was seen in Wales, with 2.6 per cent in Scotland.

Robert Gardner, Nationwide’s chief economist, said 2017 “saw the beginnings of a shift”, as rates of price growth in the South moderated towards those in the rest of the country.

He said: “London saw a particularly marked slowdown, with prices falling in annual terms for the first time in eight years, albeit by a modest 0.5 per cent.

“London ended the year the weakest-performing region for the first time since 2004.”

Mr Gardner said a 20 per cent deposit in London now typically equates to more than £80,000, based on the average first-time buyer price. This is around £30,000 higher than a decade ago.

In other regions, such as the Midlands and northern England, deposit requirements are similar to 2007, he said.

Nationwide calculated that would-be buyers face spending around eight years saving for a deposit, rising to nine years in the South East and nearly 10 years in London.

Mr Gardner said subdued economic activity and an ongoing squeeze on household budgets is likely to exert a modest drag on housing market activity and price growth in 2018.

He said: “Overall, we expect house prices to record a marginal gain of around 1 per cent in 2018.

“Over the longer term, once the economy regains momentum, we expect house prices to rise broadly in line with earnings.”

Mr Gardner said much will depend on how Brexit impacts on the UK economy.

Howard Archer, chief economic adviser for EY ITEM Club, said: “The Nationwide reported house prices rose 0.6 per cent month-on-month in December, which was the strongest increase since June.

“The fundamentals for house buyers are likely to remain challenging over the coming months with consumers’ purchasing power continuing to be squeezed by inflation running higher than earnings growth.

“Additionally, housing market activity is likely to be hampered by fragile consumer confidence and limited willingness to engage in major transactions.”

Jonathan Harris, director of mortgage broker Anderson Harris, said: “Getting the deposit together is still the biggest challenge for most first-time buyers and even a slowdown in property price growth is not enough to make the difference between being able to get on the property ladder or not, particularly in London.”

Here are average house prices across the UK and the annual change, according to Nationwide Building Society:

West Midlands, £182,861, 5.2 per cent

South West, £239,576, 4.8 per cent

East Midlands, £177,180, 4.6 per cent

North West, £157,488, 4 per cent

Wales, £150,885, 3.3 per cent

Outer South East £277,030, 3.1 per cent

Scotland, £146,578, 2.6 per cent

East Anglia, £223,613, 2.3 per cent

Northern Ireland, £131,989, 2 per cent

Yorkshire and Humberside, £151,747, 1.8 per cent

Outer Metropolitan, £361,598, 1.2 per cent

North East, £124,535, 0.2 per cent

London, £470,922, minus 0.5 per cent