PROPERTY
Housing is buoyant… and there’s a willingness to lend Andrew Webb of Baker Tilly Mooney-Moore looks at the current state of Northern Ireland’s housing market
Andrew Webb
H
aving moved house in the past few weeks — taking over a year to sell and complete — I feel I can now write a little bit more about the housing market here and the prospects for the year ahead.
One of the most common questions I get asked is ‘what will happen house prices after Brexit?’ As with most Brexit-related questions, a shrug of the shoulders and an exasperated ‘nobody knows’ is my typical response. But, on closer consideration, while Brexit adds considerable uncertainty into the wider economy mix, there is a current confidence around the housing market that is providing a boost to economic output. This sense of confidence is backed up by a recent survey from RSM who found that 61% of their survey respondents in the south feared a housing downturn compared to 37% here. Latest figures from Government tell us that there were 2,236 new housing starts between July and September 2018, an increase of nearly one third on the same period one year earlier. Similarly, the number of housing completions was up by 5.7% on a year previous. This up-tick in completions appears to be driving confidence to step up the pace on new starts. There are recent reports of record January sales from a housebuilder and signs that this is continuing into February. In explaining this, continuing favourable mortgage deals, and faster paced wage increases following a decade of stagnation are obvious markers. The house price index from
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Land and Property services reports that the average price of a house at the end of 2018 is £136,669. This is up 1.3% on the previous quarter and up nearly 5.5% on the previous year. Average house prices here are about five times average salaries. To put that in context, houses in England and Wales are around eight times more than average wages. For further context, a decade ago, house prices here were close to six times greater than the average salary, so affordability has increased over the decade. Driving some of this increase is a new willingness from banks to lend. You can get a 30-year mortgage for an average NI house with zero deposit at 2.64% (around £545 a month). Bring a 15% deposit to the table and the rate drops to 1.79% and £435 a month. It is not surprising then that UK Finance reports that there were 2,700 new first-time buyer mortgages completed in Northern Ireland in the third quarter of 2018, 3.8% more than in the same quarter of 2017. The £280m of new
lending was 7.7% more year-on-year. For first time buyers, the average loan size was £101,000 and repayments are averaging 15.8% of monthly gross incomes. House price information is a fascinating barometer of the wider economy but it is important that a significant proportion of people have no financial ‘skin in the game’ when it comes to housing. Around a third of people rent their house, either privately or through housing associations or the Northern Ireland Housing Executive. There is a serious shortage of housing within the social renting sector that is resulting in a waiting list of more than 36,000. Of those applicants, nearly 25,000 were in ‘housing stress’ and official figures are suggesting that 20,000 households are recorded as homeless. The pace of development of social housing is about 1,500 to 1,800 each year over the past decade. At that pace, there is little hope of closing the gap between supply and demand in the social sector. π