NI is the UK’s property hotspot

Northern Irish property prices are growing at four times the rate of the UK average rise.Fionnuala Earley, Nationwide’s group economist:

“Prices increased by 4.8 per cent in the final quarter of the year – more than three times the quarterly growth rate for the UK. Affordability in Northern Ireland deteriorated more than anywhere else in the UK in 2005. Yet it still remains one of the more affordable areas for first time buyers,”

  • merchantofdoom

    All the more to lose when the innevitable downturn arrives.

  • Jo

    Anyone know the correpsonding position of the southern boom? Where are we in relation to that more inevitable collapse?

  • smcgiff

    Jo,

    Some party poopers (ESRI ?) suggested that a 30% drop in house prices was possible in 2007.

    But that’s been said for quite sometime now, and eventually they will be correct.

  • George

    Jo,
    incredibly, another 23% increase in Dublin house prices in 2005 with 17% in Cork.

    It would take a 30% + decrease to bring prices back to where they were two years ago.

    At the moment, it seems the 150,000 Eastern Europeans have staved off the potential housing crash for a while longer. 31% of the new houses are being bought by non-nationals.

    The Economist first predicted the crash in 1999, then in 2003 and again in November 2005.

    The south just keeps on running. Don’t ask me how.

  • Time to get on the ladder before it’s too late… where’s the best place to live in the north and strike a balance between a fun city/town nightlife and a reasonable commute to Galway?

  • TOT

    ROi house prices are overvalued but perhaps not as much as per press etc.

    current demand is about 70k completions a year with long term demand at 40-50k a year the gap is being driven by the new EU countries – for a brief indicator look at the number of pps numbers issued!

    long term demogrpahics continue to underpin the market simple as providing a floor – but a market correction is still likely.

    the key to preventing a house price collapse is that the industry contracts its supply in line with demand – something already being to happen as tax breaks etc run off.

    the whole point about house prices though is that you only need to worry about them falling if your selling and rising if your buying. otherwise they shouldnt affect you a jot.

  • Crataegus

    There is a sound house building programme in the South which will eventually impact on the price rises.

    In the North there is a growing shortage of suitable housing. There are also problems with the perception of many areas. Would you buy a house in the greater part of N Belfast? Issues surrounding this type of perception need to be addressed.

    Planners are reducing approvals in the countryside, which I disagree with. It was their site location policy that was wrong not the increasing the number of people who can live in the country. They should be allowing new hamlets along existing transport routes and not scattered dwellings. In addition many of their concepts surrounding and relying on car usage inevitably lead to lower densities. As I said on other threads you need minimum densities in the inner wards of Belfast not Bungalows in the heart of the city. Have a drive around the Shankill if you want to see inappropriate housing mixes and land wastage. If you want to see dereliction and good housing unused try Tigers Bay.

    House prices will continue to rise as long as there is a shortage of suitable accommodation and as long as interest rates stay low. If there are sharp increases in interest rates in coming years we are in trouble. So it is vital that we reduce the heat by increasing supply.

  • What is the UK interest rate at the moment? If you were buying in the North as a BoI customer could you avail of the eurozone rate?

  • smcgiff

    ‘the whole point about house prices though is that you only need to worry about them falling if your selling and rising if your buying. otherwise they shouldnt affect you a jot.’

    Not 100% correct, as higher house prices allow people to borrow at low levels of interest. A lot of the Republic’s spending is tied into the credit available due to remortgaging.

  • Crataegus

    Pope

    I believe it is 4.5% in the UK compared to 2.25% in the Euro zone. Business loans are about 2-3% over base. So you are paying approximately one third extra interest for the privilege of using Sterling. In addition there are the costs of converting to the Euro when carrying out transactions outside the Sterling zone. Mind you there is the pain of the local monopoly notes printed by NI banks even if you are in the sterling zone.

    You can borrow in the Euro zone but the problem is you are gambling on the currency. So if Sterling went down 10% your liability has increased by about 11% If it went up well happy days. Usually best to borrow in the currency you earn in unless you have a keen interest in currency movements.

  • Thanks Crataegus… very comprehensive answer

  • DCB

    PopeB

    And even if you have a keen interest it’s still best to borrow the currency your earning in

    Though if you live in the north and you want to buy property in the south it is best to gear up in euros. As you’ll be receiving rent in euors which will service the interest. And the debt acts as a currency hedge. In that if you convert £100 into say EUR 150 and you take out EUR 150 in debt, then when you sell your asset you’ll either make a loss on the debt which equals the gain on the house or vice versa.

    UK interests rate should come down 25bps to 4.25% in feb. Euro rates seem set to rise this year by about 50 points. So the gap will narrow.