Sales Rising As House Prices Continue Falling

The volume of house sales in Northern Ireland have 'bucked the trend' and increased in May and - despite the recession - are set to rise over the next three months, according to a new survey.

However, that is at a cost as prices being paid continue to fall.

The new study published by the Royal Institute of Chartered Surveyors (RICS) and Ulster Bank said the rise is due to low interest rates and these more "affordable prices".

The news comes just days after it was revealed that the Irish construction sector overall continued to contract in May, bringing the current period of decline to four years.

According to the Ulster Bank Construction Purchasing Managers' Index, the fall in activity in the building sector gathered pace during the month, but new orders also fell at a faster rate compared to April.

This was the ninth month in a row that new orders have fallen, and plays some part in helping to keep the sector depressed across Ireland.

However, the latest more positive news is that transaction levels across NI have been rising - but from low levels, relative to historic averages.


"In terms of prices, there continues to be a mixed picture across Northern Ireland, with some areas reporting greater price stability than others. There are also differences in the experiences of different property types," an RICS spokesman said.

"The economic outlook remains challenging, with a squeeze on living standards expected."

Buyers' market

That's good news for some, as, according to Derek Wilson, Head of Lending Products at Ulster Bank, who co-produced the new report: "Where houses are priced in line with market realities, they can be expected to sell."

"There remains a strong desire for homeownership in Northern Ireland, and where potential buyers perceive prices to be stable and at levels they can afford, transactions can be expected."

For vendors though, the Ulster Bank Construction Purchasing Managers' report also revealed that house prices in Northern Ireland are continuing to decline.

Speaking last weekend, on the latest ONS Output in the Construction Industry figures, RICS Chief Economist Simon Rubinsohn said: "The date on construction output shows the trend signalled by official numbers and the picture conveyed by sentiment indicators remains far apart.

"The figures suggest that the provisional level of construction output for April was close to the average for the first quarter and way down on the numbers recorded in the final three months of 2010. Significantly, this appears to be the case as much in the private as well as the public sector.

"We remain concerned by the squeeze being placed on the construction industry, as a result of the scaling back of the public investment programme and the lack of development finance.

"This will inevitably limit the role that this important sector can play in supporting the broader economic recovery.

"That said, the latest RICS Construction Survey indicates that output does now appear to have hit a floor and, indeed, there is some optimism, particularly in the private sector, that workloads could begin to edge upwards over the next 12 months."

(BMcC/GK)