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The confidence in the Northern Ireland housing market in the last year has been borne out in the latest Northern Ireland Quarterly Price Index which has seen an average annual price increase of 6.2%, more than 3% above the rate of inflation.
Sales volume and house price growth in Q2 2018 has built on the very strong start to the year which saw a 3.1% increase in the first quarter. There are a number of factors that supports this sustainable growth, including continued affordability in comparison to the majority of UK regions, availability of new homes within the first-time buyer market and low levels of unemployment with wages starting to gain on inflation throughout 2018.
Local, national and international challenges that I have highlighted within previous reports still prevail, including the final shaping of Brexit and what it may mean for the local economy and the need for sustainable, accountable regional government that can set budgets and support local growth. However, these issues have not significantly impacted the Northern Ireland housing market in the last year with affordability and sustainability integral to market confidence.
As the main population base Belfast’s performance has had a considerable impact on the outlook of the housing market and it has seen an annual increase of 11.3% with the average house price at £172,499. South Belfast has seen two quarters of solid growth with a 3.5% rise in Q2, following a strong performance in Q1 with the average price of £240,978 remaining the highest priced sub-market within the city. West and North Belfast have seen falls in the second quarter of 2018, however prices remain up over the year.
Within the commuter zone of the Belfast Metropolitan Area higher prices prevail, with North Down up considerably year on year at 16.3%, 2% for the quarter.
The variability that we have seen in Belfast in Q2 is also prevalent in other regions with average prices in Lisburn down by 7.5%. In the North, North West and Mid-Ulster average prices are up over the year with Derry/Strabane seeing a rise of 12.5% in Q2 following a slow year for growth in 2017.
Craigavon and Armagh remain unchanged in 2018 with a slight decline of -0.4% in in the last quarter. A somewhat variable regional picture reflects specific local circumstances and potential exposure to a fluid economic environment.
Q2 Summary and forward look
Supported by a strong start to the beginning of the year confidence in the housing market in Q2 2018 has been augmented by continued affordability, sustainable growth, a resilient economic environment and low unemployment.
There are a number of factors that will influence the Northern Ireland market for the second half of 2018 and throughout 2019. The recent announcement that the Bank of England were increasing interest rates to 0.75% will impact some borrowers, however rates remain at historical low levels ensuring repayments remain affordable and local house prices remain amongst the best value in the UK.
As a region which has one of the lowest average wage rates in the UK, the local economy needs a functioning Northern Ireland Executive to support revenue generation in key areas, as well as the need to match initiatives in GB such as lifting the long-standing 1% public sector wage rise cap.
The Brexit factor also remains, and while it has not had an abiding influence on the Northern Ireland housing market to date the outcome of the on-going negotiations and any final agreement will undoubtedly influence the market, most notably in the border regions. A positive outcome to these local and national issues will enhance both housing demand and supply in the Northern Ireland market and support the confidence that exists within one of the most affordable regions of the UK.
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