House prices in Northern Ireland rose in the second quarter of the year, shrugging off pressure from strong inflation and rising interest rates, according to latest government data.
The average price of a residential property in the province was £173,898 in the three months to the end of June, up 1.4% on the first quarter and up 2.7% on the same period last year.
The result has come as a surprise to market watchers who had expected the growing tightness on household incomes to drag the property market into negative territory.
However, the continued tightening of supply of houses coming to the market has once again underpinned prices and looks likely to continue to do so in the future, particularly as the level of housing starts and completions has fallen. The figures showed there were 1,408 completed housing units in the second quarter of the year, a figure which is down 20% on the year and down 21% since the same period in 2019.
Richard Ramsey, Chief Economist at Ulster Bank, said house builders are expected to complete just 6,000 units in 2023 as a whole, a level which is far below the 7,500 units in 2019 and 14,000 in 2006, the years just before the financial crisis. He said that will feed through to fewer transactions.
Meanwhile, the latest inflation figures have also boosted sentiment in the housing market.
Ƶ inflation fell to 6.8% in the year to July from 7.9% in June as a result of lower energy prices and a range of food items. That has eased pressure on the Bank of England to raise interest rates and should prompt lenders to reduce the rates they charge to borrowers in the coming weeks and months.
That could unleash fresh demand on the housing market which, when combined with still tight supply, has the potential to push prices higher in the short term.
