House prices in Northern Ireland have dropped for the first time since the Covid pandemic, going down by 0.7% from January to April compared to late 2022. The average house price is now £203,326. Detached homes, the most expensive type, saw the biggest price decrease.
In Ards and North Down, traditionally one of the pricier regions, prices fell by 8.7% to £213,818. However, cheaper areas like Fermanagh and Omagh saw a quarterly growth of 17.3% to £208,023.
The price drop is linked to lower real incomes due to record inflation and increased mortgage costs. People are being more cautious about buying houses due to the cost of living crisis.
Despite the drop, a severe price decline is not expected because the supply of houses for sale is decreasing, especially in popular areas. Apartment prices slightly increased by 0.2%, but terraced houses, semis, and detached homes saw price falls, with detached homes seeing the steepest decrease of 2.4% in price to £285,677.
Dr. Michael McCord from Ulster University mentioned that this is the first time the housing market has shown negative growth since Covid-19. Transactions also dropped by about 6%, but there are signs of stability returning with increasing buyer inquiries and a stabilized market.
Ursula McAnulty, head of research at NI Housing Executive, mentioned that challenges like high interest rates and inflation will persist, but housing supply constraints will likely keep the market stable throughout 2023.
Michael Boyd, deputy chief executive at Progressive, highlighted the ongoing challenges in the housing market due to economic factors, but a lack of housing supply is expected to maintain prices and prevent a significant retraction.
Based on the information provided we can make some mid-term predictions regarding the housing market in Northern Ireland:
Stabilization with a Mild Price Decline: The housing market is likely to stabilize in the mid-term, with a potential mild decline in house prices. The 0.7% decrease in average house prices between January and April 2023 may continue or slightly moderate, but it's not expected to be a severe drop.
Variable Regional Trends: Different regions may experience varying trends in house prices. More expensive areas like Ards and North Down might continue to see some price reductions, while cheaper areas like Fermanagh and Omagh may see prices rise due to increased demand.
Challenges Persist: Economic challenges, including rising inflation and high interest rates, will continue to pose difficulties for potential homebuyers. Affordability will likely remain a concern, affecting buyer behavior and transaction volumes.
Market Stability: Despite the challenges, the housing market is expected to remain relatively stable due to a constrained housing supply. Limited availability of houses for sale, especially in popular areas, will help prevent a significant retraction in prices.
Demand Fluctuations Buyer inquiries may increase, indicating a level of demand in the market. However, this demand might fluctuate based on economic conditions, interest rates, and consumer confidence.
Government Intervention Impact.: Any government interventions or policies aimed at addressing the housing market may play a role in shaping the mid-term trajectory. This could include measures to boost supply or improve affordability.
Ongoing Supply Constraints. The ongoing challenges in housing supply, mentioned by Michael Boyd, are likely to persist, keeping the supply-demand imbalance and influencing price stability.
While the market may experience some turbulence due to economic factors, the limited housing supply is expected to act as a stabilizing factor, preventing significant price drops. The mid-term trajectory will depend on how effectively the market adapts to economic challenges and potential policy interventions.
