‘We’ve been bidding on houses on and off for probably the best part of three years’

In Northern Ireland house prices were historically low, but with a recent hike in demand, that’s no longer the case

Jamie Taylor has just bought his first house.

The 26-year-old from Derry was able to start saving during the Covid-19 pandemic. “I’d just got a continuing contract at work so during those two years I was on the best wage I’d ever been on, and not going to the bar, not socialising, not going on holiday and living at home meant I was able to put the majority of my wages away.

“That was when I realised it might be within my means to buy.”

He spent 12-16 months “on and off, having regular viewings and bidding” but found the prices were going up and up and he was “constantly” being outbid.

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“That was the greatest frustration, having to sit on PropertyPal or other apps looking for something to come up, but then when you found somewhere you would end up in a bidding war.

“There was always somebody who wasn’t a first-time buyer — or who was just an investor — who was able to bid more than you, and every single time it went for above the asking price, sometimes quite considerably.

“Every conversation that I had with an estate agent seemed to be that prices were crazy and houses were going like hot cakes. Everything was pretty much gone straight away.”

In the end, perseverance paid off. He spent the period between Christmas and new year “sending a ton of emails” to estate agents so he was able to “hit the ground running” when they reopened in January; he met the seller personally and built up a relationship so that when he made a direct offer, it was accepted.

He paid £120,000 for his three-bed, end-of-terrace house, and is the first to admit he has been lucky.

“That feeling of pride in getting a place is special and it’s something I still pinch myself over,” he says. “I couldn’t have done this anywhere else. If I had been in a different city, it just wouldn’t have been an option for me.”

House prices in the Derry City and Strabane District Council area are the cheapest in the North; according to the latest figures from Ulster University’s Northern Ireland Quarterly House Price Index, for April to June 2022, the average cost of a house in that area is £147,261 — though this is still more than £20,000 higher than the average cost just before the North entered Covid-19 lockdown in March 2020.

Throughout Northern Ireland — as throughout these islands — house prices have risen since the market reopened after that first lockdown in June 2020, driven by increased demand — not least due to changed priorities post-Covid and the new possibilities created by remote working — as well as the injection into the market of the additional cash saved during lockdown and the relative scarcity of properties for sale.

In the first year of the Covid-19 pandemic the average price of a house in Northern Ireland, according to the Ulster University figures, jumped from £175,551 in April-June 2020 to £195,242 in the same period in 2021, an annual increase of 11.2 per cent; from 2021 to 2022 it increased by another 4.73 per cent, to bring the average cost to £205,628 — an increase of £30,000 in two years.

“Supply and demand,” says Robert Gourley, an auctioneer and estate agent covering Derry, Donegal and Tyrone. “Go back 12 months, and the viewing and level of interest at that time was unreal.

“It was very difficult to price, the market was just finding its own way, because if you put a house on [for sale], especially those houses at £140,000, £150,000, they just zoomed up — maybe another 20 grand, which you hadn’t had for a long time.”

Now, he says, “if we had more houses, we could sell them. It’s getting enough to sell at the moment — and I think everyone’s finding the same.”

Other estate agents have had a similar experience. “Every time we release a phase, we are pre-sold before that phase generally makes it to the market,” says Stephen McCarron, the president of NAEA Propertymark — the representative body for estate agents throughout the UK — and a director of Donnybrook estate agents in Derry.

Originally from Co Derry, Carmel McCafferty and her husband have just relocated to Derry city after 27 years in Bray, Co Wicklow. “We sold it within a week, we had major demand for it… we had about 30 people, we did our viewings over two afternoons and we literally almost needed traffic lights at the front door, we ended up I was upstairs and my husband was downstairs.”

In Derry they found themselves among many returned “migrants” viewing the same pool of houses; they ended up renting in Donegal for a year before finally securing a house.

“There was a time when everybody who was looking for that mid-range, let’s call it, they were all looking for and buying the same properties.

“People were reluctant to put their houses on the market because there were no houses to buy, the supply was very low.

“So then of course you have bidding wars… about three, four, five years ago you would have got a very good house in Derry, and in the right area, for 250. Now we found that 250 was, you were talking 300, 350.”

In sought-after areas, the increase in price has been even greater. The average cost of a house in the Causeway Coast and Glens was £173,029 in the first quarter of 2020, just before the Covid-19 lockdown; when the market reopened during the second quarter that figure jumped by 11.4 per cent to £192,796, and the average price of a house in that area is now £214,723.

By contrast, according to the most recent available figures from the Northern Ireland Statistics and Research Agency (Nisra), the median annual earnings for full-time employees in the North rose by 1.7 per cent over the year to April 2021 to £29,000.

“That is a problem,” says McCarron, “because indigenous people in Portrush, Portstewart, Coleraine, Portballintrae, cannot get on the housing market because they have been priced out by money coming from Belfast.

“I don’t know what the fix is, or if there is a fix for that, because there’s very little social housing or affordable housing being built in those locations, and it’s so competitive that you’ve got builders going in and buying two or three terraced houses, knocking them down and putting in an apartment block.

“I don’t know anywhere else in Northern Ireland that’s quite like it, but the prices there are just crazy.”

Megan McClure Botha and her husband moved back to her hometown of Ballymoney, Co Antrim, to be nearer family after their priorities changed during Covid-19. “The pandemic made people reassess everything,” she says. “We’d picked Bangor because of its travel links and [working from home meant] that just wasn’t as relevant any more.”

They were able to sell their home in Bangor, Co Down, for 42 per cent more than they had paid for it five years ago. “It didn’t even make it to market — the estate agent knew somebody was looking and asked if she could have a look round it early, we said yes and she made an offer.”

This in turn gave them greater purchasing power when it came to buying their new home. “We were fortunate,” says McClure Botha. “To be a first-time buyer right now would have been significantly more difficult.”

In Belfast — where the average price of a house rose by 8.1 per cent in the last quarter to £191,040 — first-time buyers are finding themselves priced out of certain areas.

Eoin McShane and his family have been forced to postpone their dream of buying their own home and have decided to take a break from the stress of house-hunting until next year.

He and his fiancee work in the health service and have a 2½-year-old son; every time they bid on a house, he explains, the price just goes “up and up” until it is beyond their reach.

“We’ve been bidding on houses on and off for probably the best part of three years,” says McShane. “It’s been an absolute nightmare, and we’re really in no man’s land at the moment.

“There was a house in Andersonstown [in west Belfast] and the house was on for 139 and we thought it was perfect, obviously it needed work done, but in the end we were outbid by a landlord who had a substantial cash deposit, the house in the end was sold for close to 170,000.

“It’s our dream to have our own home, and to have a bit more space, but we’re at the stage now where it’s preventing us planning for the future,” says McShane.

“My son doesn’t have his own bedroom yet, it’s wee things like that, it might sound trivial but to me as a first-time father it means a lot to me for him to have his own room.”

“It’s not a massive deal, it’s a luxury in life, but it’s something that I’ve always wanted to do and to have for him, and I’ve just had to come to the conclusion that it’s not going to happen.”

For the meantime, though prices are continuing to rise, the rate of growth has slowed; in its analysis of the last quarter’s data, Ulster University warned “market activity appears to be cooling in light of the cost-of-living crisis, interest and mortgage rate increases, and the ever-increasing economic and political uncertainty.

“The noticeable reduction in sales enquiries and instructions, and less competitive bidding… will inevitably see the market returning to long(er)-term and more normal levels of activity, and serve to stabilise house prices and house price growth into the second half of 2022,” it concluded.

McCarron’s prediction is that prices will stagnate rather than reduce: “I think the market will continue on, it may become somewhat slightly subdued but I don’t think there’s going to be an overcorrection of prices… we are probably going to experience, in my view, three quarters before things start to rise again.”

In Northern Ireland, house prices were historically low; now, he says, “If you look at areas like Belfast, and certain areas of different cities, we are on a par with other areas of the UK, certainly in the north of England, and we’re not a million miles away from Scotland or Wales.”