HOUSE prices in the north have undergone the biggest annual increase since the height of the 2007 housing boom, according to the official government measure.
The Northern Ireland House Price Index put the average residential property at £159,109 for the third quarter of 2021, 10.7 per cent higher than where it stood 12 months ago.
It comes as UK inflation jumped to a near-decade high in October, as soaring energy and fuel prices pushed up the cost of living.
The latest housing report found prices rose by three per cent between the second and third quarters this year alone.
It follows similar reports from Halifax and Nationwide which detected annual increases of between 10.6 and 11.3 per cent in Northern Ireland.
A post-lockdown surge in demand for homeownership, against a backdrop of government incentives and a fall in the supply of available housing stock, have all contributed to the recent accelerated upward price pressure in the market.
Activity remained high in the third quarter, with 7,529 homes sold during the three months.
Economist Richard Ramsey said the last time the north’s housing market seen a double-digit increase was the fourth quarter of 2007.
However, prices remain well below the £225,00 peak recorded in the third quarter (Q3) of 2007, when prices rose by 50 per cent in a year.
Mid Ulster saw the sharpest increase in prices, with the average home selling for £153,549 in the third quarter, 14.1 per cent more than 12 months ago.
That was just ahead of Derry and Strabane at £143,674 (+13.9 per cent) and Newry, Mourne and Down, where prices rose 13.1 per cent to an average of 172,085.
Lisburn and Castlereagh reported the lowest annual price inflation at 7.1 per cent. But with an average house price of £183,392, the district remains the most expensive place to buy a home.
The Armagh City, Banbridge and Craigavon remains the cheapest place to buy on average, but prices have increased 11.2 per cent in a year to £140,983.
The pandemic’s impact on house completions during 2020 has partly fed into the recent price jump.
Richard Ramsey said the construction sector has undergone a V-shaped recovery in the first nine months of 2021, with work started on 6,138 new dwellings, 38 per cent up on 2020 and 10.6 per cent higher than 2019.
The 1,917 new builds started over the summer months (July-September) was also the best quarter since Q4 2007.
But that progress has been constrained by recent inflationary pressures on construction materials.
Ulster Bank’s latest business survey in Northern Ireland showed construction firms recorded lower new orders in October with private sector companies forced to pass record rates of price inflation onto customers.
