The average price of a house in Northern Ireland is now £179,530…

Over at the BBC John Campbell has been analysing the latest property stats from NISRA. From the article:

Prices were up by 3.1% compared to the second quarter and were 2.1% higher than the same period last year.

That took the average price to £179,530 with a range from £160,396 in Fermanagh and Omagh to £207,824 in Lisburn and Castlereagh.

In cash terms, the average price is now roughly back to where it was at the end of 2006.

That came ahead of a bubble and crash, which saw the average price touch £225,000 in 2007 before collapsing to less than £100,000 by 2012.

Prices also rose sharply during the Covid pandemic as people sought more space, enjoyed historically low mortgage rates and benefitted from a stamp duty holiday.

The average price in Northern Ireland is almost 30% higher than it was before the pandemic at the end of 2019.

Housing markets across the UK have been weakening as rising interest rates make mortgage payments more expensive.

Some analysts suggest that the relatively strong price performance in Northern Ireland reflects a weak supply of properties coming onto the market with a significant slow down in the number of new houses being built.

Official figures suggest fewer than 4,000 new houses were completed in the first nine months of this year.

That compares to more than 5,000 during the same period in 2021 and 2022 and is also lower than the same period in 2020 when construction work was significantly curtailed by the pandemic.

Earlier figures from HMRC show there has also been a big fall in the number of housing transactions in Northern Ireland this year.

House sales were down by 18% in the first nine months of 2023 at 17,410 transactions, compared to 21,300 in the same period of 2022.

The third quarter of the year was the busiest so far but was still down by 15% compared to 2022.

A few intriguing things. As John observed, supply is not matching demand, particularly at the lower end of the market for first-time buyers. Belfast City Council is looking for help to build over 30,000 new houses by 2035. That is quite an ambitious target; whether it can deliver remains to be seen.

I was also interested in prices being back to 2006 levels. As you know due to inflation your money buys you less now than in 2006. John was good enough to clarify this for me on Twitter:

Exactly you need to make an inflation adjustments to get a full picture. Looking at the BoE historic inflation calculator it suggests £180k in 2023 is equivalent to £109k in 2006.

So overall you can argue that house prices are low given inflation but the issue is we are a low-wage economy so many people just do not have the disposable income to cover the mortgage payments.

The solution needs to be that we build more social housing. The free market will always prefer to build higher-margin ‘luxury’ homes. The Housing Executive announced in 2020 that they would start building homes again but I can’t seem to find much progress on this.

As usual I would welcome any insight in the comments.

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