House prices down almost 30% in the North

House prices in the North have plummeted with a drop of nearly 30% over the last year, a leading report said today.

The University of Ulster survey confirmed 2008 was the worst year for the region’s housing market since the start of the 1980s.

The authors of the report said the 28% drop was no surprise and argued that it came with the silver-lining that homes were becoming more affordable for first-time buyers.

“The decline in the overall average price indicates that Northern Ireland is being exposed to the full rigours of the market downturn,” said the experts behind the report’s findings.

“However on the positive side, the market is much more affordable which may well stimulate the first-time buyer and provide the basis for a sustainable recovery during 2009.”

The figures were contained in the latest University of Ulster Quarterly House Price Index, produced in partnership with Bank of Ireland and the Housing Executive.

The survey showed prices had fallen by just over 28% in 2008.

It also confirmed the continuing low volume of house sales, with 704 transactions recorded in October, November and December, a figure just slightly up on the previous quarter’s report of 670.

The sharp decline confirms the downward trend of recent years.

But the drop followed a period of rapid increases when house prices in the North rocketed over a very short period of time.

The survey, billed as the most broadly-based of those undertaken in the North, covers approximately 120 estate agents and records all open-market transactions.

It showed the overall average price of a house in the final quarter of 2008 was £168,185 (€191,653) – a drop of 16.6% on the third quarter.

While the survey showed the weighted rate of decline across the market was 28.2% over the year, some property types saw greater falls than others.

The sharpest drop was in detached bungalows, down 34.9% over the year to an average of £218,216 (€248,665).

Semi-detached bungalows fell by 34.2% to £139,375 (€158,825) while apartments were down 29.8% to £153,564 (€174,994).

Terraced/townhouses fell by 28% to an average of £134,905 (€153,731).

Detached houses fell by 27.3% to £247,058 and semi-detached houses fell by 26.4% to an average of £166,102 (€189,282).

In Belfast the average price of housing at £178,399 (€203,346) showed a 20.9% annual decline, indicating that it fared better than the overall Northern Ireland market.

The report was compiled by Prof Alastair Adair, Prof Stanley McGreal and Mrs Louise Brown.

Alan Bridle, Head of Research at Bank of Ireland Northern Ireland, said: “There are both clouds and silver linings in this latest research.

“The new average price of under £170,000 (€193,772) is something we would have expected to see later this year.

“The overall market is now back at mid-2006 levels, but that is not bad news for everyone.

“We have come a considerable way in getting back to more affordable housing levels.”

He added: “From their peak, average prices have now fallen by more than 30% and by considerably more in many cases of newly-built properties.

“We may now be at the point for many where house buying is affordable and attractive again in the new ultra-low interest rate environment.”

The Housing Executive’s Head of Research, Joe Frey, said: “The significant reduction in house prices over the last year comes as no surprise and, at least from the point of view of first-time buyers, is a welcome development.

“However, although we can look forward to a stabilisation of the market in the second half of 2009 it is important that housing regains its role as a contributor to the economic growth which in the last analysis underpins a healthy housing market.

“The provision of a greater number of new social dwellings could act as a catalyst for the process of economic recovery as well as reducing the high level of urgent housing need.”