1st December 2003

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Issued on behalf of University of Ulster, Bank of Ireland and the Northern Ireland Housing Executive

The rate of house price inflation in Northern Ireland is continuing to slow down, according to the latest University of Ulster Quarterly House Price Index produced in partnership with the Bank of Ireland and supported by the Northern Ireland Housing Executive. The annual growth rate in house prices is now 5.36%.

The survey for the third quarter of this year showed that the overall average price of residential property rose to £105,779, exceeding the previous high set in the second quarter of this year.

The survey was based on a sample of 2,577 transactions. The most expensive location remains south Belfast where the average price was just short of £140,000, while north Belfast is the least expensive, with an average of £77,629.

According to the authors of the report Professor Alastair Adair, Professor Stanley McGreal and Mrs Louise Brown: "The annual growth rate of 5.36% suggests a pegging back in house price inflation though the average price is still on an upward trajectory. With the first signs of interest rates starting to creep upwards, the housing market may be facing a slower phase of price growth."

The value of the Northern Ireland House Price Index, which is calculated relative to the base quarter for the survey in 1984, is now 396.76 representing a new peak figure.

Alan Bridle, Senior Manager, Research, at Bank of Ireland Northern Ireland, said house prices here were already adjusting to a spell of slower growth, in contrast with the market in Gt. Britain where prices were still rising by more than 1% a month.

“We should take comfort in a local market that is less vulnerable to negative shock,” he said.

Mr Bridle said house buyers had been anticipating an upturn in borrowing rates. He expected another small rise in Bank of England base rate by mid-February.

“By this time next year homeowners could be paying as much as 1% more on their mortgages. On a standard 25-year loan of £80,000, that equates to an additional £50 a month in repayments,” he said.

The Chief Executive of the Northern Ireland Housing Executive Paddy McIntyre said “The
annual increase of just 2 per cent in Belfast may help to control the need for first-time buyers
to live outside Belfast and commute longer distances to their places of work. The reduction in
the annual rate of increase from 8 to 5 per cent is in line with the Housing Executive’s strategic
forecast in its Annual Review of the Housing Market”.

Property types

The survey revealed that semi-detached property had shown the highest rates of increase over the year, with semi-detached bungalows up by 10.85% at an average price of £89,581, although they represented only 3% of the market. In contrast, semi-detached houses are the principal property type in the survey, with 30% market share, and their average price of £97,459 represents an annual increase of 9.53%.

For detached bungalows (11% market share) the average price in the third quarter was £130,052, an increase of 5.61%. Detached houses (17% market share) had risen by 4.7% to an average of £156,730.

Terraced houses have performed below the market as a whole, with a rate of increase of only 2.29% to an average of £77,805 compared to the third quarter of 2002 when, the authors said, a particularly high price prevailed for terraced homes. It also reflected the fact that significant number of newly-built town houses were in the survey, helping to maintain the overall price structure in the sector.

Apartments, averaging £101,691, continued to fluctuate in terms of prices with only an increase of 1.07% over the year. This sector is dominated by new builds as opposed to existing property, so prices reflect a different agenda, notably brownfield development and the trend for developers to concentrate on more affordable apartments for the first time buyer.

Location

Location remains a fundamental issue, with substantial variations in price levels and performance trends.

In Belfast the overall average price of £105,704 was up over the year by only 2.04% confirming recent evidence that the city market is growing at a much reduced rate.

Alan Bridle of Bank of Ireland said it appeared that increasing numbers of people were taking the view that while Belfast was the place to work, it was not necessarily the place to live and there were better properties to be had for the same money 20, 30 or even 40 miles outside the capital.

The report showed that some parts of Northern Ireland continued to have higher than average growth, notably Antrim/Ballymena with 20.6% year on year, Enniskillen/Fermanagh/South Tyrone with 14.03%, Derry/Strabane with 13.6%, Mid Ulster with 10.29% and North Down with 9.43%.

Key Points from Quarter 2, 2003

• The overall average price of a house in Northern Ireland is £105,779

• The weighted annual rate of increase is 5.36 - still significantly above the rate of inflation

• Regional variations are strong – ranging from just a 2.04% annual rise in Belfast to more than 20% in Antrim/Ballymena.

For further information, please contact:

Press Office Department of Communication and Development
Telephone: 028 9036 6178
Email: pressoffice@ulster.ac.uk