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Northern Ireland Quarterly House Price Index for Q2 2011
This survey analyses the performance of the Northern Ireland housing market during the second quarter of 2011 spanning the months of April, May and June. The report is concerned with trends and spatial patterns in the housing market drawing comparisons with the second quarter of 2010, as a measure of annual change, and with the first quarter of 2011 as an indicator of short-term, quarterly change. The report is produced by the University of Ulster in partnership with Bank of Ireland and the Northern Ireland Housing Executive.
Price trends reflect higher sales volumes
Alan Bridle
Head of Research
Bank of Ireland
Northern Ireland
August 2011
Four years have now passed since the summer of 2007 when average house prices in Northern Ireland reached their highest point of c £250,000. The evidence from our latest survey provides confirmation, if it were needed, that the period of extended market adjustment may be advanced although not yet complete. There is also a degree of encouragement for those either considering a purchase at the present time or within the wider “housing economy”, those that are dependent on higher volumes of activity.
It is not a surprise to be reporting a further decline in the average price to around £138,000 and a pick-up in the volume of sales – there is a close relationship between these two variables. Higher market turnover at the new, more affordable price points, is inevitably dragging the average price lower as a form of “market clearing”takes place.
Market Dynamics
While the resale market remains relatively subdued in terms of typical owner-occupier buying and selling activity, trading up / trading down, relocation due to employment changes etc, there has been a reported increase in activity in some segments, including the acquisition of some higher value properties at well below what would have been peak asking prices while at the other end, there are sales of portfolios of buy-to-lets and other properties, sometimes on the instructions of lenders, and often with price tags between £60,000 and £80,000.
The latter may be an indicator of both a greater incidence of cashbuying and a sign that some buyers are seeing a return of long-term value in the market.
Rising Trend of Cash-Buyers
Some of these trends are reinforced when we consider the latest available mortgage data for the region which would appear not to be consistent with the increase in transactions recorded in both this survey and that for Q1. In the year to May, there were an estimated 2,700 mortgages for house purchase in the region compared to 3,700 for the same period in 2010 (source: CML), which may point to a greater use of cash in the market.
Outlook
For the residential market, with average prices having fallen now by c 45% from peak, affordability measures are clearly more positive for potential buyers even against a backdrop of relatively static incomes. The much steeper correction in local prices means Northern Ireland again occupies a more realistic and natural position close to the bottom of a UK regional league table, closely aligned to income and broader economic fundamentals.
Furthermore, low interest rates are also helping to support affordability with median income multiples and interest payments as a % of income back at 2003/04 levels while concern about the pace of recovery continues to persuade the Bank of England to keep official interestrates at the historic low of 0.5%.
It seems clear the local housing market will continue to face into headwinds during 2011 notably from the pressures on household finances. Given the scenario where confidence is in short supply, there is some risk that prices overshoot as in 2007, although this time to the downside. We should not be surprised therefore to see average prices a little lower again by year-end, particularly if the trend of rising transactions is sustained.
Alan Bridle
Head of Economics & Research
Bank of Ireland Northern Ireland
research@boini.com
General Market Trends
The key finding of this survey for the second quarter of 2011 is more of the same to that which prevailed in the first quarter, with the volume of sales maintaining its upward direction but average price levels still remaining subdued apart from exceptions in some of the local market areas.
The overall average price of residential property in Northern Ireland for the second quarter of 2011 is £137,814. In simple percentage terms this represents a decline of 15.7% over the year comparing the current price mean with that for the second quarter of 2010. The weighted rate of annual decline, the preferred measure for these surveys, is 15.3% (15.6% in the previous survey). The comparator quarter for annual performance (the second quarter of 2010) coincided with the formation of the coalition government in the UK. With the first budget occurring late in that quarter the austerity measures did not impact directly on the housing market for the second quarter of 2010 which in many respects was a relatively buoyant quarter for the housing market.
Performance by Property Type
Performance by property sector remains highly variable over both the annual and quarterly time periods and reflecting the market as a whole average price levels are lower.
Annual performance provides a snapshot comparing the current average price on a property basis with corresponding statistics for the second quarter of 2010. On an annual comparison basis price levels are lower for all property types
Annual % change and average price
| Market Sector | Annual Change | Average Price Quarter 2 | Average Price Annual |
|---|---|---|---|
| Terraced/townhouse | -18% | £86,598 | £89,176 |
| Semi-detached house | -8.2% | £135,808 | £135,381 |
| Detached house | -23% | £227,613 | £231,344 |
| Semi-detached bungalow | -11.8% | £107,845 | £117,009 |
| Detached bungalow | -16% | £165,150 | £169,135 |
| Apartment | -11.8% | £116,956 | £117,300 |
Performance by Region
At a regional level, the picture is similar to that for the overall Northern Ireland level. Average prices continue to be rather variable, volatile and generally lower in most market areas though some exceptions as highlighted do occur.
| Location | Average Price Quarter 2 | Average Price Half Year | |
|---|---|---|---|
| Northern Ireland - All | £137,814 | £140,678 | |
| Belfast In Belfast, the average price of housing £142,312 has declined relative to the second quarter of 2010 by 23.2%. Likewise there has been a decline in average price over the quarter by 4.8%. The Belfast position reflects the overall Northern Ireland situation with evidence of increased market activity but achieved sale prices still down. |
Belfast - All | £142,312 | £145,421 |
| North Belfast | £93,162 | £92,298 | |
| South Belfast | £217,631 | £209,898 | |
| East Belfast | £140,997 | £151,559 | |
| West Belfast | £122,761 | £124,908 | |
| Belfast Metropolitan Area Within the commuter zone of the Belfast Metropolitan Area, the three local housing markets demonstrate broadly similar trends though the East Antrim market shows less volatility. For North Down the overall average price of £152,982. The average price is significantly lower over the year but highly comparable with the previous survey (£154,481). In Lisburn, the overall average price (£159,385) fits into the overall trend of lower house prices in contrast to the first quarter. For the East Antrim market, while there has been a decline in overall average sale price over the year, the scale of this reduction (3.6%) is significantly lower than for the Northern Ireland market. |
North Down | £152,982 | £153,632 |
| Lisburn | £159,385 | £168,314 | |
| East Antrim | £124,962 | £127,863 | |
| North and North West The overall picture for market areas in the North and North West is variable with suggestions of strenghtening prices in the second quarter. In Antrim/Ballymena the overall average price (£127,448) is somewhat lower over the year down by 5.9% but higher relative to the first quarter of 2011, up by 1.3%. This variable picture is reflected on a property type basis. For the Coleraine/Limavady/North Coast market, the overall average price £141,387 is down over the year by 2.3% but there is lower over the annual time-scale by 5.3% but significantly up (by 8.5%) compared with the first quarter of 2011. For Derry/Strabane the overall average price level (£116,615) is down by 2.2% compared to the second quarter of 2010 but significantly reduced from the high average price reported for first quarter of 2011. |
L'derry / Strabane | £116,615 | £131,474 |
| Antrim / Ballymena | £127,448 | £126,699 | |
| Coleraine / Limavady / N. Coast | £141,387 | £133,385 | |
| West The two markets in the West of Northern Ireland are both characterised by lower average sale prices in common with most other regional markets this quarter. The overall average price for the Mid-Ulster market is £122,573; although this a reduced sales price there is nevertheless evidence of enhanced market activity over the past quarter. For Enniskillen/Fermanagh/South Tyrone, the overall average price has dropped to £108,286 but with evidence of a higher volume of transactions over the last quarter. The overall price structure appears to be influenced by the low average price of terraced/townhouse property (£58,649). |
Enniskillen / Fermanagh / S. Tyrone | £108,286 | £115,368 |
| Mid Ulster | £122,573 | £134,043 | |
| South For the South of Northern Ireland a different pattern emerges with both market areas showing signs of recovery. For Craigavon/Armagh the overall average price (£138,125) has improved significantly from the very low average price for the first quarter of 2011 (£105,898) and over the year there is clear evidence of market recovery. For the Mid & South Down market, the overall sales price (£158,672) is highly comparable with that for the second quarter of 2010 suggesting a stabilisation in the market during 2011. |
Mid & South Down | £158,672 | £151,820 |
| Craigavon / Armagh | £138,125 | £120,221 |
|
Average House Price by Region
The long-term house price index is calculated relative to the price levels for each property type at the base quarter for the survey in 1984. The overall index is now at 514.04 suggesting a continuation of the downside of the cycle with a growing convergence towards the Retail Price Index.
The pattern of the house price index has been erratic since 2009 showing uneven recovery for the Northern Ireland housing market. It would seem that this rather tentative fluctuating picture is likely to prevail over the 2011 as the market seeks to stabilise.
