House prices edge up - but the watchword is caution

House prices are rising in Northern Ireland but sentiment is turning more cautious, according to the latest RICS/Ulster Bank monthly survey
Gary McDonald Business Editor

HOUSE prices in Northern Ireland edged up a fraction last month - a trend that is likely continue because of a lack in supply of new housing stock.

Surveyors appear to be becoming more cautious about the market, based on some of the recent noise around the border and Brexit, as well the expectation that the Bank of England will raise interest rates.

The findings come in the February Royal Institution of Chartered Surveyors/Ulster Bank residential market survey, which elicits the views of surveyors.

Its publication also coincides with latest data from Halifax, which said annual UK house price growth slowed to a five-year low in February, with economists suggesting that the modest rise in mortgage rates in recent months had hit the housing market hard.

The RICS index found that 35 per cent more surveyors in the north said that house prices rose in the past three months than those who said they fell (the only areas of the UK with higher readings were the north west of England and Wales).

Respondents also indicated that new buyer enquiries eased back marginally last month (albeit that the three-month average is upwards) and expectations among surveyors for sales activity in the three months ahead dipped to its lowest in five years.

RICS residential property spokesman Samuel Dickey said there is still little evidence of new instructions to sell picking up, which points to a continuing lack of supply in the market and the likelihood that upward pressure on prices will remain.

“Surveyors appear to be becoming more cautious about the market," he said.

"We’ve seen an ongoing shortage of properties coming on to the market for some time, and this doesn’t appear to have changed in the latest survey.

"This lack of supply will likely support current price levels and indeed potentially push prices higher in the months ahead. It also remains to be seen if the more cautious sentiment in relation to activity is sustained, or is just a short-term reaction to the recent news flow”

Sean Murphy, managing director of personal banking at Ulster Bank, added: “The latest Council of Mortgage Lenders data showed that first time buyer, home mover and home-owner mortgage lending all rose year-on-year in the fourth quarter of 2017, and our own experience suggests this trend has continued into the first quarter of 2018.

"There are no doubt challenges for the market ahead – not least the lack of supply – but in our experience, owning their own home or moving house are still key goals for many people in Northern Ireland and this is likely to remain the case.”

Meanwhile the Halifax data pointed to UK property values seeing a 1.8 per cent annual uplift in February - the smallest increase since a 1.1 per cent rise in March 2013.

It said the average UK house price in February was £224,353, down slightly from November's high of £226,408.

Russell Galley, managing director at Halifax, said: "While we expect price growth to remain low, the low mortgage rate environment, combined with an ongoing shortage of properties for sale, should continue to support house prices over the coming months."

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