Business

Strong demand and dwindling supply continuing to drive house price inflation in Northern Ireland

The latest house price index from Ulster University indicates the average price of the home in the north has increased by 0.6 per cent in a year.
The latest house price index from Ulster University indicates the average price of the home in the north has increased by 0.6 per cent in a year. The latest house price index from Ulster University indicates the average price of the home in the north has increased by 0.6 per cent in a year.

HOUSE prices in Northern Ireland have increased by 10.6 per cent in a year, according to new analysis from Ulster University.

The quarterly house price index, produced alongside the NI Housing Executive and Progressive Building Society, said prices rose 2.2 per cent between the second and third quarters of 2021.

It follows a similar report from Halifax which last week found prices in the north have climbed 11.3 per cent in 12 months.

A separate survey out today has linked the continuing price growth here with a fall in the supply of housing.

The October 2021 RICS and Ulster Bank Residential Market Survey is based on the input from property professionals around the north.

It said strong demand coupled with a dwindling supply in housing stock had accelerated house price inflation.

HMRC has already identified September 2021 as one of the busiest months for the north’s housing market since 2007.

The RICS survey indicated that the number of properties being listed for sale in October continued to fall, adding to already existing issues with supply.

It was the fourth month in succession that survey respondents reported a fall in new instructions.

Land and Property Services (LPS), which produces the official Northern Ireland house price index (HPI), put the average price of a home here at £153,449 for the second quarter (Q2) of 2021.

LPS is due to publish its Q3 analysis next week.

The Ulster University (UU) index, which uses differently methodology, put the average price of a house in Northern Ireland at £198,821 in Q3.

UU said its figure is based on the analysis of 3,314 transactions.

Halifax put the average price of home in the north in October at £169,308.

Michael Boyd from Progressive Building Society, said the post-lockdown momentum in the housing market has been influenced, in part, by the recent push in deals prior to the phasing out of the UK Government’s Stamp Duty holiday.

The report’s lead researcher, Dr Michael McCord from Ulster University, said the price inflation was a consequence of strong levels of market demand coupled with supply inelasticity.

“Entering into 2021, the market displayed strong resilience, with consecutive-quarter price inflation evident, driven by high demand and optimism,” he said

“This buoyancy has continued within this quarter, with notable structural market dynamics and challenges starting to emerge, particularly in relation to the lack of housing supply.

“This, compounded with the volatile economic setting posed by the precarious inflationary environment, poses some challenges ahead for the housing market.”

Ursula McAnulty from the Housing Executive said while the fourth quarter is traditionally a quieter period for the housing market, there is still some expectation of ongoing demand and price growth.

“As the cost of living increases, the situation for both prospective and existing borrowers may become more challenging as we look ahead into 2022,” she added.