House prices in Northern Ireland are continuing to head higher but signs have emerged that the recent upward momentum may be waning.
Latest data from the Land & Property Services showed the price of the average residential house in the province climbed by 7.9% year-on-year in the final quarter of the year.
While a continuation of the strong rally over the last 18 months, prices climbed just 0.1% in the fourth quarter of 2021 compared to the third quarter.
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That puts the average price of a house at £159,151, ranging from £138,944 in Armagh City, Banbridge and Craigavon to £184,847 in Lisburn and Castlereagh. Meanwhile, the number of houses changing hands in 2021 climbed sharpy to 29,769 from just 21,207 in 2020.
Surveys from the Royal Institute of Chartered Surveyors in recent months have suggested a lack of supply of new house for sale has been behind the recent rally with the Covid-19 pandemic impacting the amount of new stock coming online.
Also tempering sentiment is Russia’s war against Ukraine which has contributed to inflationary pressures as prices for energy and commodities soar in reaction to the conflict and sanctions against Russian supply.
In turn, that has put upward pressure on interest rates, with the Bank of England hiking the base rate to 0.75% from 0.5% this week. That move will make mortgage borrowing more expensive and could deter some buyers.
Richard Ramsey, Chief Economist at Ulster Bank in Northern Ireland, said global events and price rises will play a large part in dictating where the market goes next.
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“Northern Ireland’s residential property market will face a more challenging year for price growth,” he said. “Increased economic uncertainty and a savage cost-of-living crisis will impact on affordability for many would-be house buyers.”
To put the recent house price rally into context, average prices are currently 5.3 time the average full time salary, according to the data which is presented by the Northern Ireland Statistics and Research Agency.
Although up on the 4.5 times recorded in 2014, it is still far from the 9 times median salary recorded at the peak of the hour price boom in 2007, just before the financial crisis hit.