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There are strong indications that the north's housing market is improving
There are strong indications that the north's housing market is improving There are strong indications that the north's housing market is improving

WE’VE heard a lot of talk about what’s been happening in the property and construction sectors in recent months. So I thought it would be worth looking at what has actually been going on.

In terms of the housing market in Northern Ireland, home-buyer enquiries rose for the first time in sixth months during September, prices and sales also rose, and chartered surveyors are relatively upbeat in their expectations for the next three months ahead.

In the immediate aftermath of the shock EU referendum result, there was a downshift in sentiment in the local housing market due to uncertainty fuelled by the vote, coupled with the impact of the higher stamp duty now in place on investment property purchases.

After the initial shock had passed, data for prices, price expectations and sales bounced back, but surveyors remain somewhat cautious about the outlook for sales.

Limited supply has characterised the Northern Ireland housing market in many respects in recent years, and this remains the case. In the latest RICS/Ulster Bank residential market survey, new instructions to sell rose modestly - but they are still subdued relative to new buyer enquiries, suggesting that supply in the market will likely remain tight.

In terms of construction, the latest RICS/Tughans survey points to a modest slowdown in quarter three relative to the previous three months, but overall activity was still rising. The caveat of course is that a large proportion of work by Northern Ireland’s construction sector is being done externally, and when it comes to crucial infrastructure activity, growth in workloads is very weak, to say the least. This is an issue of significant concern for the construction sector and the economy as a whole, as we need to upgrade our infrastructure to be competitive and to attract foreign direct investment.

The exchange rate environment is also something that will concern the construction sector. The falling value of sterling against the dollar and the euro will lead to higher costs for construction.

The Office for National Statistics (ONS) estimates that the value of imported construction materials represents 10 percent of construction output. Sterling has lost 15 percent of its value against the euro and 18 percent against the dollar in recent months. If this feeds directly through to materials prices, it would suggest that materials prices generally will rise around three percent and overall construction costs by over one percent.

There are several factors that may soften this impact. Buyers may switch to UK manufacturers. Both overseas suppliers and importers may absorb some of the increases to maintain market share. Stocks held in the UK supply chain will not be affected.

However, the rising cost on imported raw materials used by UK manufacturers, such as plastic and metals, will put upward pressure on their prices. The exchange rates may also have an effect on labour costs, as working in the UK becomes less attractive to overseas workers who send some of their earnings to their home countries.

Overall, what remains central to our economy is the need to continue to invest in housing supply and infrastructure provision. In the face of intense competition to attract foreign direct investment, sustained growth levels are dependent upon providing certainty across investment in strategic and resilient infrastructure, and sufficient housing supply, alongside providing an adequate quantity of grade A office space, and having a highly skilled workforce.

:: Ben Collins is director of the Royal Institution of Chartered Surveyors (RICS) in Northern Ireland, which represents 4,000 cross-sectoral members comprising of chartered and associate surveyors, trainees and students.