Bubble and Bust: A Brief Look at the Property Market in Northern Ireland
The property market in Northern Ireland during the last 15 years has experienced the sharp end of both housing price booms and housing price collapses. The property bubble that emerged in Northern Ireland between 2006-07 saw prices massively outstrip those in the rest of the United Kingdom. According to the Office for National Statistics by August 2007 average prices in N.I. were at £224,670 against England’s average of £194,328(1) – figures that are scarcely believable given the reversal in fortunes which was to follow. Northern Irish property prices were also higher than their respective counterparts in the South, with the Government of Ireland publishing an average new-build high of £219,713 (GBP)(2). The bust that followed in Northern Ireland was dramatic. The property market crashed and entered a prolonged slump, with some economists putting N.I’s house price crash as amongst the world’s worst – estimates putting the decline at between 35%-40%(3). Other economists and commentators suggested prices depreciated by as much as 44%(4), leaving many trapped in the nightmare of negative equity. House prices in Northern Ireland were the only part of the UK to not recover to pre-crash levels, though house prices did continue to gradually rise after this slump was reversed in January 2013.
The property market in Northern Ireland, like the rest of the United Kingdom, confounded expectations and remained strong throughout the pandemic, however the impact on N.I. has been uneven across the six counties. The Quarterly House Price Index survey published by Ulster University writes of “pent-up demand” during the spring 2020 lockdown, with a 5.8% average price increase on the corresponding second quarter for the previous year(5), once the housing market re-opened in Northern Ireland on June 14th. It is hoped that Northern Ireland’s property market will remain resilient and continue to post positive growth, particularly given the large infrastructure projects that have been promised by both Stormont and Dublin. However, these have been criticised for being behind schedule. The most notable example of this being the extension of the A5 highway to Dublin, with these delays said to have costed up to £700m(6). Many estate agencies remain optimistic about the future of the housing market in Northern Ireland. They stress that prior to the Covid-19 pandemic the market was vibrant and gaining momentum. However, this confidence has been impacted by economic uncertainty concerning the impact of the pandemic. If unemployment rises, then this will undoubtedly impact the market. Despite this, there appears to be a stability in the Northern Irish market that was not there following the financial crisis. This brings with it a level of cautious optimism when combined with the eventual completion of many delayed infrastructure projects, which will only promote continued recovery.
1. Office for National Statistics. UK House Price Index: December 2020 [Internet]. 2021 [cited 2021 Mar 4]. Available from: https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/housepriceindex/december2020
2. Government of Ireland. House Price Statistics [Internet]. 2020 [cited 2021 Mar 4]. Available from: https://www.gov.ie/en/collection/2a8bf-house-price-statistics/#
3. Campbell J. Northern Ireland house crash “among world’s worst” [Internet]. BBC News. 2011 [cited 2021 Mar 4]. Available from: https://www.bbc.co.uk/news/uk-northern-ireland-15757932
4. PricewaterhouseCoopers. Northern Ireland property prices still 44% behind pre-recession peak [Internet]. 2017. Available from: https://www.pwc.co.uk/who-we-are/regional-sites/northern-ireland/press-releases/UKEO-0717.html
5. Ulster University. Northern Ireland Quarterly House Price Index [Internet]. 2020. Available from: https://www.ulster.ac.uk/__data/assets/pdf_file/0014/620114/UU_HPI_Q2-2020_.pdf
6. McClements F. £700m “wasted by delays and overruns” in 11 key northern infrastructure projects. The Irish Times [Internet]. 2020 Oct 22; Available from: https://www.irishtimes.com/news/ireland/irish-news/700m-wasted-by-delays-and-overruns-in-11-key-northern-infrastructure-projects-1.4387502
By Josh Pritchard