Northern Ireland House Price Overview – Q1 2019
PropertyPal’s Chief Economist, Jordan Buchanan gives his insight into the latest Northern Ireland House Price Index figures for Q1 2019 and what they mean for current and future local home owners.
NI Displays UK leading performance, despite weaker start to 2019…
The latest House Price Index figures for Q1 2019 show house prices in N.Ireland increased at an impressive 3.5% compared to last year. This is equivalent to a typical home costing £4,500 more at the start of this year than it did in 2018.
This was the second fastest recorded rate of growth across all 12 UK regions with wider UK house prices growing by only 1.4%, largely driven by falling prices in the capital.
Whilst prices appreciated over the year, the previous 3 months showed a weaker performance. Indeed, house prices fell by 1.0%, or £1,370 on average compared to the final quarter of 2018. This was only the 2nd quarter of recorded price falls over the last 24 quarters of data.
To date the standardised home price is estimated at almost £135,000 which represents a cumulative growth of 38% compared to the low points in 2013 following the property downturn.
Encouragingly property prices increased across all home types last year:
- Semi-detached homes increased on average by 4.7% to £131,300, an increase in value of £5,900 compared to Q1 2018.
- Apartments increased on average by 4.3% to £110,000, an increase in value of £4,500 compared to Q1 2018;
- Terrace homes increased on average by 3.9% to £94,100 an increase in value of £3,500 compared to Q1 2018; and
- Detached homes increased on average by 1.5% to £199,600, an increase in value of £2,900 compared to Q1 2018
Despite the latest appreciation, house prices are approximately 40% below peak levels in 2007 and over 41% lower than the current UK wide average (although a more sensible comparison is 33% lower than Great Britain excluding London). For context, compared to London you could buy 3 homes in N.Ireland and have £60,000 left to furnish the 3 homes.
It has been a difficult journey for many home owners over the last decade with the legacy of the financial crash still leaving visible scars. However, as it stands, local house prices are amongst the most competitive across all UK regions which should support first time buyers to join the market. This should not be overlooked and is a significant selling factor to attract and retain our workforce. Owning a home is a feasible ambition for many, whereas other parts of the UK reflect unaffordability for the vast majority of the population.
Even once earnings (which are lower locally compared to Great Britain) are brought into the picture, the evidence supports local affordability. A typical full time worker earns approximately £27,000 in N.Ireland which compared to an average home value of £135,000 is a multiple of just under 5x. In England as a whole, a full time workers salary is higher at £29,900 but a home costs £245,000, meaning the ratio reaches a much more sizeable 8x. In London and Dublin both ratios are 13x and 11x incomes respectively.
Beneath the headline figure for N.Ireland, there is considerable variation in prices at the council level. Areas such as Lisburn and Castlereagh have the highest price ticket for homes, typically costing in the £160,000 range. At the reverse end in Armagh, Banbridge and Craigavon, house prices are closer to only £120,000. Over the last year, 9 out of 11 councils have experienced growth in house prices (see table below for detail). It is particularly noteworthy that homes in Causeway Coast and the Glens achieved close to double digit levels of growth.
The number of home sales is a particularly useful barometer of wider economic confidence. In the opening quarter of this year, there were 4,270 recorded transactions for home purchases, down from 5,470 sales in the same quarter last year. However, it is expected that the volumes of sales will be revised up as late returns are submitted. Nonetheless this was a notable slowdown with only Mid & East Antrim experiencing an increase in the number of homes sold over the last year. Elevated levels of Brexit uncertainty in recent months will have been a significant factor in the slowdown. It is likely that potential home buyers are exercising caution until further clarity around the UK’s future relationship with the EU emerges.
All things considered, this was a relatively weak opening quarter of data for the local property market with a reduction in both prices and sales volumes. However, it should be noted that the opening quarter of a year typically tends to show weaker data. Indeed, house price growth has averaged only 0.1% in the opening quarter across N.Ireland since 2015.
Taking a longer-term view, the performance over the past 12 months is much more favourable. House prices have grown amongst the fastest in the UK, across all types of properties and in the majority of areas at the local council level. Slowing sales volumes in the last 12 months is more concerning, albeit perhaps expected with Brexit uncertainty being the most commonly cited factor as consumers have adopted a ‘wait and see’ approach.
Whilst the fundamental economic drivers of house price growth remain strong, sentiment cannot be overlooked. The next few months in the Brexit negotiations will be important for the wider UK economic performance, the outcome of which will have knock on effect on property prices.
This Autumn, PropertyPal will be releasing its first contribution in a new Residential Property Review series. PropertyPal’s Residential Review series will offer data driven economic analysis on the residential property market in N.Ireland.
At PropertyPal we recognise that buying, selling, moving or renting a home is one of the biggest decisions of a lifetime. We aim to provide informative insights on current market trends as well as providing forecasts and outlooks on the future performance of the N.Ireland economy and the residential property market.
The report can help inform all stakeholders with an interest in the property market including; estate agents, developers, policy makers, the media and the general public. At PropertyPal we aim to give our users the best experience and we hope this addition of market analysis will prove to be a useful gauge of developments in the property market. We look forward to sharing this research in the coming months.
Jordan Buchanan, Chief Economist