As the Office of National Statistics and Queen's University release their latest reports on house prices, Phil Davison of Negative Equity NI comments on what this news means for home and property owners across Northern Ireland.
“The headlines mean that lots of homeowners can breathe a small sigh of relief – but they're still only headlines. There's a lot more going on in the property market that makes a picture a little less clear and trends less predictable.
Those with small amounts of negative equity are 7.5% closer to breaking even, being able to sell up and move on – essentially restarting their lives.
If this further stimulates activity in a market that's suffering from undersupply, that's a good thing.
Although it's exactly this undersupply that's pushing prices up.
What we really need is a major boost to construction and investment in sustainable development. This not only creates jobs and a more buoyant economy, but ensures we're less reliant on the property sector and its boom and bust tendencies.
A property market that has left us exactly where we are today…
The real story is that while a growth in house prices is narrowing the negative equity gap, our own figures tell us that over 60,000 people are still on average overstretched to the tune of £68,000.
That's a lot of property debt to be carrying around for the foreseeable future – stagnating the market and, more importantly, stopping people from getting on with their lives.
Across Northern Ireland, property prices remain around 45% below their 2007 peak. Leaving most people who bought at that time with mortgages that are more than what their house is now worth.
On the flip side, sales are up too. Both the RICS and Ulster Bank Residential Market Survey agree the number of newly agreed property sales in NI is at its strongest rate since last summer. Surveyors have also reported increasing sales activity throughout April – more so than in any other UK region.
We see firsthand that new buyer enquiries are rising at a faster rate than new vendors are coming onto the market – but there's one key caveate here too: the properties that are selling are those that are realistically priced.
For those in negative equity or mortgage arrears, house price rises are some relief when negotiating a write-down with the lender – an increased sale price reduces the residual debt, reducing what is left owing overall.
Still, all of this month's news also points to Northern Ireland surveyors being the most optimistic about the market continuing to rise – with the average house price here being £145,000 – the lowest of any UK region –there certainly is plenty of room for growth.
But, again that growth needs to be measured and in line with affordability. That relies on growth in the jobs sector and more confident bosses investing in their people with wage rises.
Around a quarter of surveyors expect activity to continue to rise between May and July.
House prices in Northern Ireland rose by 7.5% in the past 12 months and by 9.6% cross the majority of the UK, according to figures published by the Office of National Statistics
Our figures indicate that it could take around 15 years of sustained, continued house price rises to solve the negative equity problem in certain areas of Northern Ireland. That's a long time to wait if you've outgrown your home, need to move for work, your circumstances have changed or you're facing affordability issues.”
For more information on Negative Equity NI, please contact John Megaughin at Clearbox Communications on 07740361581 / [email protected]