Property prices in north 'still 44 per cent behind pre-recession peak' says PwC report
AVERAGE house prices in Northern Ireland are still a whopping 44 per cent behind their pre-recession peak - and will trail behind every other UK region until at least 2020, a new report says.
And with wages growth stagnating, household disposable incomes are only 89 per cent of their 2005 levels – which is equivalent to an annual income cut of around £1,810 for every household.
The figures are contained in PwC’s latest UK Economic Outlook, which paints a gloomy picture for the north's economy compared with virtually the whole of Britain.
Based on transactions for the first four months of this year, PwC forecasts that average Northern Ireland property prices will increase by a paltry one per cent in 2017 - a fraction of the predicted UK average increase of 3.7 per cent.
The report says there has been a huge disparity in how the regional housing markets have performed since the recession. While average house prices across the UK have grown by 17 per cent since mid-2007, a quarter of UK local authorities are still experiencing average property prices below their 2007 figure.
And the greatest decline has been in Northern Ireland, where on average house prices are still 44 per cent below their pre-recession peak.
Looking forward to 2020, the report forecasts that the average Northern Ireland property will cost £134,000, just under nine per cent more than the 2016 average of £123,000.
That’s also well below the UK average, where property process are expected to grow by around 36 per cent between 2016 and 2020, making the average UK property worth around £274,000 by 2020.
PwC says that UK house prices were not impacted as quickly as expected by the UK’s decision to leave the EU though price growth stalled in the second half of 2016 and is now showing signs of a slowdown.
Richard Snook, senior economist at PwC, said: “There is a huge disparity in how sub-regional housing markets have performed since the recession.
"Those local authorities that have experienced the greatest falls in house prices since 2007 are all based in Northern Ireland, while London dominates biggest risers with all boroughs experiencing price growth of more than 50 per cent.”
PwC’s recent Northern Ireland Economic Outlook looked at how much ground the local economy has made up as compared to the region’s peak economic performance, which occurred before banking crisis and housing slump that began in mid-2007.
Its recovery index suggested that, while employment has now passed the pre-crisis peak, real wages in Northern Ireland are still only 94 per cent of their 2005 levels and real household disposable incomes are only 89 per cent of their 2005 levels – that’s equivalent to an annual income cut of around £1,810.
The Outlook said that job creation is not being accompanied by a proportionate increase in wealth-creation, so further economic recovery will rely on an increase in productivity and knock-on increases in real wages and household incomes.
PwC also said that Northern Ireland can expect economic growth of 1 per cent in 2017, falling to around 0.9 per cent in 2018.