The recovery in the Northern Ireland housing market became increasingly robust in the third quarter of 2014, according to the latest Ulster University Quarterly House Price Index produced in partnership with Bank of Ireland UK and the Northern Ireland Housing Executive.

The survey covering July, August and September revealed an annual increase in the average house price to £141,173. When weighted to account for variations across different housing types, this represented a rise of 5.2% on the same quarter last year.

Compared with the second quarter of 2014 the weighted increase was much more modest, at just 0.3%.

The survey showed that the recovery in the volume of house sales in Northern Ireland was continuing, with 1,952 transactions recorded - remaining consistent with the previous quarter.

The authors of the report, Professor Alastair Adair, Dr John McCord, Professor Stanley McGreal and Dr David McIlhatton of the Ulster University, said: “Our latest survey points to further strengthening of the local housing market with average price levels up significantly over the year and strong transaction evidence underpinning an active market.

“One note of caution is the slowing rate of price increase in the third quarter possibly reflecting stricter lending criteria introduced under the new regulatory regime for mortgage finance earlier this year.”

Despite price increases over the past year, the report said there was still a highly affordable price structure in Northern Ireland. The percentage of properties sold at or below £100,000 dropped only slightly from 40% in the previous quarter to 39%, still representing a large portion of the market. Overall, 69% of properties in the survey sold at or below £150,000.

The authors noted that in this survey the share of the market taken by newly-built houses had dropped significantly to just 10% compared to 18% in the second quarter.

Alan Bridle, UK Economist/Market Analyst at Bank of Ireland UK, said: "The overall picture remains one of steady progress with all regions in Northern Ireland seeing some price growth in the last 12 months, although the quarterly performance is more variable.

 “Looking ahead, the decline in the share of new build sales may point to a need to accelerate new housing starts to meet potential demand in some locations. There is also a risk that the current narrative of ‘spending cuts’ could weigh both on household confidence and the pace of the region's housing recovery."

The Housing Executive’s Head of Research, Joe Frey, said: “There is no doubt house prices are moving upwards again in line with expectations, but it is important not to be complacent. The high levels of negative equity in Northern Ireland, in my view, means that a sustained recovery is more of an uphill struggle.”

Property Types

Over the year all types of property showed a significant increase in average price suggesting the housing recovery has been broadly based. The strongest performance was by detached bungalows up by 9.1% to £154,064, while detached houses rose by 4.6% to £229,670. Apartments also continued to perform well, with the average price up by 8.6% to £103,408. Both semi-detached houses, at an average of £123,494, and semi-detached bungalows, at £108,515, rose by 4.6%. Terraced/townhouses increased by 3.5% to an average of £85,818.

Regional performance (see table)

Although there was some variation, the price growth apparent at a Northern Ireland level was reflected across most local markets.

The market in Belfast continued to rise substantially, with the average price in the city up by 9% over the year and by 6% over the second quarter.

South Belfast remained the most expensive area for housing, with an average sale price of £192,294.

House Price Index

The long-term House Price Index, calculated relative to the base quarter for the survey in the final quarter 1984, continued its recent upward path, rising to 501.86

 Ends   

Average house price by region Q3 2014

Media contacts

For Ulster University: Press Office, Ulster University + 44 (0)28 9066 178

For Bank of Ireland: Catherine Agnew, Smarts Communicate + 44 (0)28 9039 5500 / mobile 07779101360

For NIHE: Jonny Blease or Jim Murray + 44 (0) 28 9031 8700