House Price Index for Quarter 1 2013 - Northern Ireland Housing ...

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Northern Ireland Quarterly House Price Index Introduction This survey analyses the performance of the Northern Ireland housing market during the first quarter of 2013, the months of January, February and March. The report is concerned with trends and spatial patterns in the housing market drawing comparisons with the first quarter of 2012, as a measure of annual change, and with the fourth quarter of 2012, as an indicator of quarterly change. The report is produced by the University of Ulster in partnership with the Bank of Ireland and the Northern Ireland Housing Executive. The price statistics are based on market evidence from a sample of 1,407 properties. The sample size represents a further small increase in the volume of sales compared to the final quarter of 2012 confirming the more active property market highlighted in the previous survey. In this report, information is presented on the residential property market for Northern Ireland, with an analysis of sale price by different property types. The overall performance of the housing market is measured by a weighted index that reflects the market share of each property type. The index captures various movements within a single statistic and allows change over time to be tracked. Regional analysis considers trends in market areas throughout Northern Ireland. Contents Improving Sentiment Northern Ireland’s housing market: prospects for 2013 and beyond General Market Trends Performance by Property Type Performance by Region The House Price Index Contributors Page 1 Page 2 Page 3 Page 4 Page 6 Page 8 Page 9
produced in partnership with 1 May 2013 Improving Sentiment The mini-revival in house sales in Northern Ireland continued during Q1 with the largest sample of reported transactions in the quarterly survey since Q4 2007. While acknowledging low base effects in the statistics, activity levels in the market during the first 3 months of 2013 were up over 50% on the same period in 2012. The figures may appear a little more positive in the context of the few weeks of particularly adverse weather conditions that prevailed during March and the civil disturbances in January. The survey continues to highlight significant variances by geography – the Belfast market has been especially busy over the last quarter, accounting for almost one third of sales while conditions in some of the provincial locations and more rural locations remain tougher. As in previous surveys, the more densely populated commuter locations of North Down and Lisburn continue to post relatively strong performances on both the quarterly and annual comparisons. With an overall average price across the region of just over £131,000, the market has returned to levels last reported in the early months of 2005. After a period of relative stability in this measure, the changing mix and distribution of sales in the lower price bands has clearly had a significant impact on pushing the overall average price lower. In this latest survey, the terraced segment represents 30% of all sales (including a large concentration in Belfast) compared to 21% in Q1 2012 while detached properties account for a smaller share. Supportive of these trends is a further re-profiling of price points with nearly half of all properties now sold at or below the £100,000 level and around three quarters at or below £150,000. Both cash buyers and borrowers seeing value again Higher demand from both first time buyers at the new price points coupled with investors attracted by rental yields on some properties are reported as key drivers of increased activity while some modest loosening in the mortgage market, partly as a result of the UK Funding for Lending Scheme, may also be a positive influence. While cash-buying is clearly a feature of sales volumes at the lower end of the market, the latest regional mortgage data from CML is entirely consistent with this picture with a median advance for house purchase having declined to c £75,000 and below £70,000 for first-time buyers. Interestingly, though not widely recognised, the median advance as a percentage of prices, typically 75-80%, is now higher than that which prevailed pre the financial crisis, a commentary on the hyper-inflationary nature of the market in those days. While the average income of borrowers has fallen significantly from 2007 peaks, in parallel the steep correction in prices and sustained period of exceptionally low interest rates has resulted in much improved affordability measures with typical income multiples now below 3x and average capital and interest payments now less than 20% of income. For those who can gather up a deposit, it appears the decision to buy rather than rent has become more attractive for some at the new market levels. Prospects Seasonal trends should be supportive of higher sales volumes over the next few months while as we look ahead to the remainder of 2013 and with the average price having now declined by around 50% from peak, the downside risks now seem limited. Short-term movements will of course continue to be strongly influenced by the precise mix of property sales during each quarter. We might expect typical “starter homes” and detached properties to at least maintain their value at around current levels but in contrast, the semi-detached segment may struggle a little without a more active “home-mover” market. Variable performance within the region will continue to be a characteristic of the market The macro economic backdrop is expected to remain difficult. We can take some encouragement from recent signals indicating a very marginal return to growth for the private sector – led by services – but the labour market recession continues with the jobless rate continuing to tick higher and worrying trends in both youth and long-term unemployment. Despite positive job announcements in some sectors and sterling performances from a number of our businesses, particularly in export markets, in reality the growth rate of the regional economy is unlikely to be robust enough to trigger a reversal in labour market trends for some considerable time. Labour-intensive sectors such as construction and retailing continue to face into strong headwinds and will not be engines of job creation in the short-term. Household finances remain tight and with inflation closer to 3%, many continue to face a drop in real living standards. As expected, at a UK level the March Budget featured a package of new and expanded housing measures under a Help to Buy banner. The policy intentions are clear – to lower the deposit hurdle for creditworthy households to get on the ladder or move home and make it easier for equity-constrained borrowers to remortgage – but the schemes are embryonic in nature and the potential application, if any, to the Northern Ireland market very uncertain. Alan Bridle UK Economist, Bank of Ireland UK T: 028 9043 3519 E: research@boini.com
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House Price Index for Quarter 1 2013 - Northern Ireland Housing ...

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