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Prospects strengthen for the advice market in Northern Ireland – analysis

by: Emma Lunn
  • 16/04/2015
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Official statistics out this week showed that house prices in Northern Ireland are rising almost twice as fast as those in England.

Figures from the Office of National Statistics showed that Northern Ireland house prices went up 14.2% in the year to February, the biggest rise since November 2007. In comparison house prices in England increased by 7.4% over the same period. 

The ONS index says the price of a typical house in Northern Ireland is £152,000, comparable to the country’s mid-2006 level.

Meanwhile the latest figures from RICS also show that Northern Ireland is outperforming the rest of the UK with the strongest house price growth in March and the highest price expectations over the next three months.

So, with the Northern Ireland housing market on the up, are there opportunities for brokers and lenders to target this area?

Neil Hoare of the Home Loan Partnership says property market growth in Northern Ireland in the mid-noughties would appear to have been driven by the fortunes south of the border and the benefit of investment of European money which drove job growth. 

“Unfortunately the financial crisis saw the province hit hard on both counts and so much of the property market still remains in negative equity,” he says, “Indeed the large swings of property values in Northern Ireland make it difficult to predict how the market will perform over the coming months and years, one reason why many of the mainstream lenders have not returned to lending in the province.” 

Northern Ireland suffered a much deeper and prolonged house price crash than the rest of the UK. In 2011 some areas were suffering declines of 40 to 50% compared to 2007 prices.

The province’s recovery has equally been slower than the rest of the UK and very much depends on which areas of Northern Ireland you look at. Property values in South Belfast and North Down have seen the biggest increases over the past 12 months, while the rest of the country has remained static or seen marginal increases.

However Mortgage Advice Bureau, which floated on AIM last year, began recruiting in Northern Ireland at the start of the year, which it attributed to pushing its adviser numbers past the 650 mark.

IFA network Openwork confirmed it has seen a ‘meaningful recovery’ in Northern Ireland, with lending levels up 25%, building on the improved confidence that was also evident in 2013.

It said there has been some uncertainty linked to public sector cuts, the economic recovery has been broadly based and key metrics such as incomes to house prices remain positive.

Its expectation is that Northern Ireland will deliver another strong performance in 2015, outpacing that of the rest of the UK and the network is targeting mortgage seminars and other events at NI this year.

Paul Dalzell, the MD of Mortgage Solutions NI, Openwork’s largest enterprise in NI, said: “I can confirm that we have seen a significant increase in activity around mortgage completions & applications, although a long way from the 2007 levels this is indicative of the increased confidence in the NI housing market. The increased activity and indeed bidding is particularly strong around the Greater Belfast area, this increase is still at significantly lower prices than the highs experienced in 2006/7, with values still around 35% + lower . We at Mortgage Solutions NI have seen our completion increase since 2011 by over 250% , but this is still some 55% below the 2007 high “

Anecdotal evidence from local estate agents supports this view and confirms bidding wars in some areas with demand outstripping supply and investors returning to the market. However, supply issues could change as traditionally Spring sees more properties come on to the market.

Tracey Harte from estate agent Harte Mcgarrigle in Strabane, Co Tyrone was surprised that house prices in Northern Ireland had gone up 14% as that wasn’t her experience.

“We have seen small increases in prices achieved – we are seeing more properties going to bidding with maybe three of four people bidding on them,” she says, “There is definitely increased interest in first-time buyer properties but our biggest problem is stock – we have seen the investors sneaking back into the market looking at property. We have a big demand for rental properties and have nothing to offer them really. The investors know this and are looking mainly at buying repossessions but the repossessions coming onto the market have slowed up considerably.”

Harte predicts prices will increase slowly in Strabane with demand, and lack of supply, for first-time buyer property being a big issue.

On the plus side, Northern Ireland is still largely affordable for people buying their first home. A report by Lloyds Bank last month found four of the top 10 most affordable UK cities for buying a home are in Northern Ireland.

A home in Londonderry costs an average of just 3.92 gross average annual earnings. Belfast 4.49 times earnings, and Newry 4.51 times.

In comparison Oxford was found to be the least affordable UK city to buy a house, with the average home price costing nearly 11 times the local gross average annual wage. The figure was 8.75 in Greater London.

As the housing market gears up, albeit patchily for now, we’ll see interest and adviser prospects in this part of the UK keep step with them.




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