House prices in Northern Ireland are nearly 10% higher than they were last year. The average price for a house in Northern Ireland is £153,449.
While we are not seeing the insane prices we had during the last boom there is a huge demand for houses. Rental prices have also increased. If you like traffic this 2 bedroom flat on Stockmans Lane can be yours for only a grand a month.
Rising property prices give homeowners the delusion that they are richer. They think they are sitting on a rising asset. But you can only realise the growth of the asset if you sell up and move out of the country. If you sell your house the house you want to buy will also have risen, making you no better off.
The key issue is Northern Ireland is a low wage economy and we need more homes for lower earners. If you are in retail or the service sector you could be paying 2/3s of your salary in rent or housing costs. This sucks money out of the economy because it will be money they can’t spend on other things like shops, going out and other services.
We need to do two things.
The first obvious one is to build more houses. The Housing Executive and the various housing associations need to get the finger out and just build more new developments. Money has never been cheaper to borrow. We should be looking at new techniques like offsite construction. Fast House up in Limavady are churning out houses in their factory. I would like to talk to someone in Fast House so if you are reading this give me a shout.
The second thing we need to do is put more controls on the rental market. We need to stop middle-class people hoovering up houses to rent or pricing out locals in coastal areas. House prices in the North Coast are up 17% in the past year. I get it, you love your weekend breaks to Portrush but it is selfish to have a holiday home lying empty 11 months of the year when local families can’t get a home. Get an Airbnb instead.
If you pardon me while I rant for a minute. Dear middle-class people: stop buying houses to rent. Have people learned nothing from the last crash? 15 years ago every solicitor and accountant watched too much Homes Under the Hammer and thought they were buy-to-let superstars. Many were nearly destroyed in the property crash. But it seems people learned nothing and buy-to-let is coming back into fashion. Being a landlord is a pain in the hole and nowhere near as lucrative as you might imagine. I have no shortage of stories of friends who lost hundreds of thousands in the last crash. Many are still trying to pay off the loans. Stick your money in an Index Fund, you will get better returns with zero stress.
Houses are for people to live in. We need to stop thinking of them as piggy banks for the middle class.
I help keep the good ship Slugger afloat by managing the business and techy stuff.