NI Housing Market Cools In 2022 As House-Buying Falls

House-buying has fallen by 31% and house prices have shown negative growth for the first time since the Covid pandemic, according to the latest research from Ulster University.

Findings from the latest Northern Ireland Quarterly House Price Index show a cooling within the housing market over the course of 2022, driven by the erosion of real incomes, increased mortgage costs for both first time buyers and existing homeowners, observed price growth soften and the number of sales completions gradually decreasing.

The research suggests that the slowing economy, allied with the continued cost-of-living pressures, is starting to impact on consumer behaviour, including repayment, accessibility affordability and ultimately house price sensitivity.

Although reassuringly for homeowners, the report has argued that waning supply and the absorption of new build stock, coupled with reduced listings in areas of traditionally high demand, will help protect the market from any potentially severe price correction.

The Quarterly House Price Index is produced by Ulster University in partnership with the Northern Ireland Housing Executive and Progressive Building Society, and analyses the performance of the Northern Ireland housing market during the first quarter of 2023 (January – March).

Other key report findings include:

• The index displays a quarterly house price decline of -0.7% relative to Q4 2022, with the average house price of residential property in Northern Ireland now standing at £203,326;


• The apartment sector exhibited the highest quarterly price change with an increase of 0.2% compared to Q4 2022, the average price of an apartment is now £158,621;

• The terrace / townhouse sector has seen a decrease of -1.9% relative to Q4 2022, with the average price standing at £131,865;

• The semi-detached sector shows a quarterly price decrease of -0.1%, with an average price of £190,698

• The detached sector displayed a decrease of -2.4%, and the average price stands at £285,677.

Introducing the findings, lead researcher Dr Michael McCord, Reader in real estate valuation at Ulster University, said: "The cooling of the housing market has continued into the first quarter of 2023, where for the first time it has displayed some negative growth since the onset of COVID-19. Despite this nominal decline, the market has remained steady, although it continues to face mounting and continued headwinds. Annual inflation has not declined to expected levels resulting in interest rates reaching a 15-year high further squeezing the incomes of those on tracker or standard variable rate mortgages.

"While market transitions have decreased markedly relative to this time last year, they are down approximately six percent from the end of last year. There are signs within the market of increasing buyer enquires, and against the backdrop of ongoing supply-side issues, the market and price sensitivity look to have stabilised."

Ursula McAnulty, Head of Research at NI Housing Executive, which commissions the research, said: "Many challenges, including interest rates and inflation, remain for purchasers, and we are unlikely to see a significant lessening of these challenges in the short to medium term. Despite this, the ongoing housing supply constraints will temper the impact on house prices, with this stability in the housing market likely to remain for the rest of 2023."

Michael Boyd, Deputy Chief Executive and Finance Director at Progressive, said: "The Northern Ireland housing market has continued to weather considerable headwinds from the wider economic environment in the first quarter of 2023. Financial market jitters, rising inflation and, with it, rising inflation have kept buyers on the sidelines, reducing affordability, paring transactions and even knocking average prices into negative territory on a quarterly basis.

"However, there remains a lack of supply within the local housing market and that will continue to underpin prices and prevent a significant retraction. Add to that the fact inflationary pressures appear to be easing and there is a good chance that sentiment will improve in the current quarter. Only time, and the wider economic environment, will tell."