Average house prices in Northern Ireland have risen by almost 5 per cent in the past year, but a new report has said there are signals of weakening demand in the market, with “noticeable reductions” in new listings and buyer enquiries.
The latest Northern Ireland quarterly house price index, produced by Ulster University, notes that the average house price in Northern Ireland during the third quarter of 2023 was £205,545 (€235,382), a 2.4 per cent increase compared to the previous quarter, and a 4.7 per cent increase relative to this time last year.
Dr Michael McCord, reader in real estate valuation at Ulster University and lead researcher for the report, said that the Northern Ireland housing market remains “resilient” despite the ongoing volatile economic setting, interest rate and mortgage lending environments.
However, he said there are signals of weakening demand, with “noticeable reductions in new listings and buyer inquires” as consumer confidence wanes and potential buyers hit the pause button to see where interests go over the next few quarters.
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“This is reflected in mortgage lending statistics which show approval rates down 30 per cent in September,” he said.
Some 83 per cent of agents surveyed in the report had observed a slowdown in transactions and associated market activity compared to the previous quarter, and 72 per cent noted a decline in the volume of buyer enquiries.
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Ursula McAnulty, head of research at the Northern Ireland Housing Executive which commissioned the research, said that the local housing market remained “relatively steady” in the third quarter.
“However, there is a growing sense of pressure and structural difficulty in the local housing system as households struggle to find and sustain suitable, affordable accommodation, irrespective of tenure,” she said.
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The report noted that while the Northern Ireland market has displayed relative strength, it must contend with potential future interest rate hikes, sluggish economic growth, and a decelerating job market as significant challenges on the horizon.
Michael Boyd, chief executive of Progressive Building Society, said that price growth in the third quarter was supported by tight housing supply as well as the recent pause in interest rate hikes by the Bank of England.
“However, headwinds persist in the form of worries that further interest rate rises may be on the horizon and signs the wider economy may be weakening. The future direction for the market will be dependent on these competing factors,” he said.
The quarterly house price index was based on 3,072 transactions, and was produced by Ulster University in partnership with the Northern Ireland Housing Executive and Progressive Building Society.
