NI house prices rising fastest in Europe - report

Northern Ireland's house prices are rising faster than anywhere else in Europe, according to a report published yesterday.

The Royal Institute of Chartered Surveyors (RICS) found in the European Housing Review 2007 that Northern Ireland had a price growth of 36 per cent last year.

Poland, with 32 per cent, and Denmark, with 22 per cent, were not far behind. The UK saw its house prices rise by 10 per cent in 2006. Price increases for the Republic were estimated at 12 per cent.

According to the report, 2006 was supposed to be the year when the housing boom deflated, with rising interest rates and limited affordability.

The Northern Ireland spokesman for the RICS, Tom McClelland, said: "The UK market as a whole performed well, but it was Northern Ireland at 36 per cent that was the real powerhouse of Europe, as our relatively buoyant economic conditions, a strong investor market and a significant shortage in housing supply pushed prices up very significantly."

He added: "Rising income and employment levels have cushioned markets from rising interest rates, and the prospects for 2007 remain good as many economies have entered the year on a firm note."

While the growth is good news for investors in Northern Ireland, it "has added to the considerable affordability issues facing many households and first-time buyers", Mr McClelland said.

Of Europe's big four markets - the UK, France, Germany and Italy - only the UK bettered its 2005 performance.

Mr McClelland said the findings reflected the UK's "dire land and new housing predicament, as lack of supply continues to artificially inflate the market". He said Europe had so far escaped the stagnant housing market under which the US is labouring.

In the Republic, prices rose sharply in the first half of the year, with increases of 18 per cent. This dropped during the summer, perhaps indicating that increases in mortgage interest rates are starting to have an impact.

France dropped to 7 per cent, a sign that its housing market may be levelling out.

Germany remained stagnant, but the RICS spokesman predicted that the housing market may begin to mirror the economy's improving fortunes.

The Scandinavian countries continued their rapid growth, while price rises in central and eastern Europe were slowing.