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Housing market slowing says RICS and Ulster Bank Residential Market Survey

As the Brexit deadline looms nearer without an agreed deal following Theresa May’s defeat on Tuesday, Northern Ireland’s relatively buoyant housing market has continued to show signs of a slowdown. However, according to the latest RICS (Royal Institution of Chartered Surveyors) and Ulster Bank Residential Market Survey, Northern Ireland still remains better off than other regions of the UK.

The latest survey included an additional question relating to the biggest perceived challenge affecting the housing market at present. 70% of respondents in Northern Ireland chose Brexit uncertainty, with a lack of stock being quoted by 40% of respondents, and a fifth pointing to affordability.

The results for February 2019 indicated that although the balance of respondents reporting rising house prices and an expected further increase in the near-term has eased back, Northern Ireland still reported the strongest balance across the UK regions in both categories.

The three-month outlook for sales activity is broadly flat. Although reports of new buyer enquiries have edged into positive territory, there was a slight downturn reported in the rate of new instructions.

Recent results and predictions for the next three months may indeed be tentative largely due to Brexit uncertainty, but the results appear to indicate an expectation that that the Northern Ireland housing market will withstand the pressure and bounce back. Indeed, the longer-term outlook is more optimistic, with the vast majority of respondents expecting prices to rise up in the next year and sales to be healthy.

Samuel Dickey, RICS Residential Property Spokesman in Northern Ireland, (pictured) said: “As the end of March draws closer, there is clearly some uncertainty, and unsurprisingly, there is some evidence of this in surveyors’ near-term expectations. Despite this though, it is encouraging that surveyor feedback suggests a more positive 12-month outlook and indeed the Northern Ireland housing market currently appears more resilient than other UK regions.”

Terry Robb, Head of Personal Banking at Ulster Bank, said: “The Northern Ireland housing market is currently relatively upbeat when compared to other parts of the UK. However, in the current climate, some buyers and sellers may be erring on the side of caution, seen for instance in the lower levels of new instructions. Mortgage demand though remains relatively strong, and we continue to see good interest from potential homebuyers and movers.”

Simon Rubinsohn, RICS Chief Economist, said: “Although activity in the housing market continues to be weighted down by the lack of available stock, changes in the tax regime affecting property, and affordability; feedback to the latest RICS survey makes it pretty clear that the ongoing uncertainty around how Brexit will play out is the critical factor influencing both buyers and sellers. And with little sign that the issue will be resolved anytime soon, it could prove to be a challenging spring for the housing market and the wider economy.

“It is clear from professionals working in the market that this environment requires a greater degree of realism from those looking to move. A reluctance from some vendors to acknowledge the shift in the balance of power in the market will compound the difficulty in executing transactions.”

The main findings of the Residential Market Survey

The balance of respondents reporting an increase in prices in the last three months was +36%. While remaining the highest rate in the UK, this was a slight drop from the January results, which indicated that 44% more surveyors perceived prices to have risen than those who said they fell.

Similarly, the price expectations balance for the next three months is at +15%, suggesting that while surveyors expect prices to continue to rise at a stronger rate than the rest of the UK, it is a weaker rate for Northern Ireland than previous.

The net balance for new buyer enquiries was +5%, edging into positive territory and reflective of the reported good first-time buyer interest.

The balance of new instructions in the last month fell from +31% to -21%, leading to the forecast of sales in the next three months remaining subdued, with a net balance of 0.

Despite the cautious short-term outlook for sales activity, the 12-month forecast appears brighter with a net balance of +36% of respondents expecting an increase in sales and +93% of respondents expecting prices to rise.