House prices drop by massive 25 per cent in Mid Ulster area

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THE PRICE of terraced and townhouses in Mid Ulster dropped by a massive 25 per cent over the past year, according to a recent survey.

The latest University of Ulster Quarterly House Price Index produced in partnership with Bank of Ireland and the Northern Ireland Housing Executive showed that the average price of terraced/townhouses fell to just £83,029. This compared to a drop in prices of 7.7 percent across Northern Ireland.

Indeed prices dropped on all property types across the Mid Ulster area over the past year.

However, compared to the third quarter of 2010, the latest survey showed some improvement with terrace-townhouse prices rising by 6.6%, semi-detached bungalows up by 2.7% and detached bungalows up by 5.3%.

The overall average house price in Mid-Ulster declined by 6.5% over the year to £138,569. This compared with an annual decline of 9% in the previous survey, indicating a further relative improvement in the market, according to the report.

The report showed that after an optimistic start to 2010, prices slipped back in the second half of the year across Northern Ireland.

The university’s survey of 110 estate agents for the final quarter of the year found that the overall average price of a house was £149,795. The volume of house sales continued to fall, with a sample of 684 open market transactions in the fourth quarter compared with 795 in the third quarter and 1,009 in the second.

The authors of the report - Professor Alastair Adair, Professor Stanley McGreal and Dr David McIlhatton - said: “The second half of 2010 has been a difficult period for the housing market in Northern Ireland, contrasting with the tentative signs of recovery in the first half of the year.

“It seems that the prospects for the UK economy, local fears of public sector cuts and possible contagion effects from the Irish economy may have dented confidence in the local market and that the inclement weather conditions may have impacted on sales volumes in the final quarter.”

The survey report said that lower prices and reduced sales suggested that the housing market continued to lack any momentum, a sentiment supported by anecdotal evidence from estate agents throughout Northern Ireland. However, a number of agents in the Belfast area and east of Northern Ireland expressed greater confidence in the quarter suggesting a regional variation which is supported by the quarterly price movement.

Alan Bridle, UK Economist, Bank of Ireland, said: “This survey confirms that 2010 was not a year of housing recovery in Northern Ireland and the market faces into further headwinds in the next 12 months, both on the demand and supply sides - household incomes are falling in real terms and interest rates are likely to rise while, in reality, funding and regulatory pressures across the UK market will mean little change in the pattern of mortgage activity in the short-term.

“Overall, 2011 may be the year when the local market bottoms out.”

The survey indicated that the market is becoming increasingly lower priced with 29% of properties selling at or below £100,000. Collectively, 63% of houses sold at or below £150,000. In comparison, at the peak of the housing boom, less than 10% of properties went for below £150,000 – which, said the authors, indicated a potentially more affordable housing market.

The Housing Executive’s Head of Research, Joe Frey, stated: “It is important not to lose sight of the positive side to the huge drop in prices that we have seen since 2007. The ongoing cost of servicing a mortgage is now much more affordable for first-time buyers and investors alike.

“The key challenge for both policy makers and lenders is to restore confidence in the market, and in particular facilitate a more relaxed lending regime where the size of deposits is not such an insurmountable hurdle”.