North's housing market sees major slowdown

BELFAST BRIEFING:ANYBODY TRYING to sell a house in Northern Ireland will probably start seriously panicking this week.

New research to be published today will show there has been a dramatic fall in the number of houses changing hands in the first three months of this year.

The good news is that price levels have not collapsed - yet.

But according to a key industry survey from the University of Ulster, there has been a major slowdown in the housing market in the North in the first quarter of this year.

Research carried out among 120 estate agents for the University of Ulster House Price Index shows there was a 60 per cent drop in the number of houses sold between January and March 2008 compared to the numbers sold in the same period last year.

The UU House Price Index, which is produced in partnership with Bank of Ireland and the Northern Ireland Housing Executive, reports there were 896 recorded house sales in the first quarter of this year.

This compares to 2,120, in the corresponding period last year - this is the lowest number of quarterly house sales recorded in more than 24 years.

Although the numbers of house sales has dropped dramatically, the average price of a house in Northern Ireland has not, according to the report.

The UU House Price Index suggests that the average price of a house in the North now stands at about £230,908 (€290,000) - still 7.5 per cent higher than it was a year ago.

Belfast continues to outperform the rest of Northern Ireland, the average price of a house in the city is now £254,011 (€320,000) - up 22.4 per cent on last year's corresponding prices.

But overall house prices in the first quarter of this year have fallen back by 4.6 per cent compared to where they were in the last quarter of 2007.

There are a couple of exceptions to this rule: first, detached houses, according to the survey, are still selling strong with some fetching an average sale price up by 4.4 per cent.

The second is the fact that the average price for an apartment in the North has jumped by about 16.2 per cent to £213,327.

But other areas such as Craigavon/Armagh are suffering as the market continues to weaken.

The average house price in this part of the North has dropped to £172,644 - a fall of 24.2 per cent over the quarter and 22.4 per cent annually.

It is cold comfort for some but the latest research appears to suggest that price falls have been largely confined to properties that are worth less than £250,000.

The authors of the report, Prof Alastair Adair, Prof Stanley McGreal and Louise Brown say the fall in prices reflects a continuing correction in the housing market.

"The short-term quarter figures suggest a weak market during the first three months of 2008 which if it continues into the second and third quarters of the year may well see annual rates of change move into negative figures."

They believe the biggest immediate worry for the housing market is the small volume of sales and that this trend is impacting on both existing and new build markets.

The UU House Price Index shows that many estate agents actually reported a situation where there had been few or no sales at all during the first three months of the year.

Economist Alan Bridle, who is head of research at Bank of Ireland in Northern Ireland, believes that house prices are likely to remain on the "downside" over the over coming quarters.

"With two consecutive quarters of negative growth the local housing market is technically in recession for the first time since the early 1990s," Mr Bridle said.