The results of the latest Royal Institution of Chartered Surveyors (RICS) and Ulster Bank Residential Market Survey show that house prices in NI are continuing to rise, but the rate of price growth appears to be easing back as the picture regarding market activity becomes more challenging.
A net balance of 70% of NI respondents said that house prices rose over the past quarter. Whilst still strong, this is the fourth survey in succession that the price balance has eased, and it is the lowest price balance recorded since January 2021. Looking forward, a net balance of +22% of respondents anticipate that prices will rise in the three months ahead. As such, Northern Ireland is the only region of the UK where respondents on balance expect prices to increase in the final quarter of 2022. NI respondents also on balance expect prices to edge upwards over the next 12 months.
Looking at new buyer enquiries, there is a continued pattern of easing demand. September was the third consecutive month of local respondents on balance reporting a decrease in potential new buyers, with a net balance of -14% of respondents recorded. Sales activity is also muted with a net balance of +5% of respondents reporting a rise in September.
Regarding supply levels, new instructions to sell fell flat in September, compared to a net balance of +13% in August, with anecdotal evidence suggesting some potential vendors have held off listing their properties for sale due to economic uncertainty.
Samuel Dickey, RICS Northern Ireland Residential Property Spokesman, says: “Northern Ireland is seeing some easing in enquiries and demand from extremely high levels earlier in the year. However, surveyors are continuing to report anecdotally that in many areas demand is still greater than supply. Whilst the market is clearly in a different place than it was earlier in the year when demand was extremely high, we would expect the lack of supply to continue to be a significant factor in the market for the foreseeable. This perhaps explains why surveyors on balance expect price growth over the coming 12 months.”
Terry Robb, Head of Personal Banking at Ulster Bank, added: “The easing in house price growth and the reduction in demand from potential buyers is unsurprising given the current climate. With the sharp increases in energy bills and the rising cost of living more generally many consumers are focusing on making their own homes more energy efficient. And for those buying their first home or moving house, the EPC rating of a property is now much more important than it was. Research by our parent bank NatWest shows that almost half of consumers looking to buy a property considered a property’s EPC rating as very important factor – a 10 percentage point increase year-on-year.”
Commenting on the UK market as a whole, Simon Rubinsohn, Chief Economist, commented: “The turmoil in mortgage markets in recent weeks has compounded the increasing level of economic uncertainty resulting from higher energy bills and the wider cost of living crisis, in shifting the dial in the housing market. Even though the headline price balance remains in positive territory for now, storm clouds are visible in the deterioration of near term expectations for both pricing and sales. Looking further out, the picture portrayed by the RICS survey has clearly shifted in a negative direction.”
“How this plays out in terms of hard data will inevitably depend in part on the state of the mortgage market once it settles down, but it is difficult not to envisage further pressure on the housing sector as the economy adjusts to higher interest rates and the tight labour market begins to reverse.
“For now mortgage arrears and possessions remain at historic lows but they are inevitably going to move upwards over the next year, as pressure on homeowners grows. However, as lenders have been a lot more cautious through this cycle with high loan to value mortgage accounting for a much smaller share of the lending book than in the past, this should help to limit the adverse impact on the market.”
