Falling interest rates are leading to a rise in demand from would-be house buyers in Northern Ireland with some signs of supply also going up, a report said today.
Demand from buyers rose at the fastest rate in nearly three years during August, according to the latest residential market survey from the Royal Institution of Chartered Surveyors (RICS) and Ulster Bank.
But it warned that there was still not enough supply to meet demand, pushing up prices in both the buyer market and the rental market.
A net balance of 53% of surveyors in NI said new buyer enquiries had gone up in August –the highest percentage since November 2021, and up from 38% in July.
And a net balance of 54% of respondents said supply levels had gone up in August — the highest balance since the pandemic.
There was also a consensus that agreed sales had increased in the month — and it was predicted that sales would continue to go up over the next three months.
A net balance of 75% of surveyors said prices had gone up over the last quarter — the highest percentage of UK regions. And across the UK as a whole, prices were reported to have flattened in August.
Surveyors also predicted that prices would go up in NI in the next three months, though not in the same strong numbers as July and August.
The Bank of England cut interest rates in August from 5.25% to 5% — the first cut since 2020 — in a move which has made mortgage rates more affordable and led to more housing market activity.
Samuel Dickey, RICS NI residential property spokesman said: “Interest rate cuts are boosting confidence but the most significant factor impacting the market continues to be the fact that demand is outstripping supply.
“This is a longstanding challenge, and whilst an increase in supply to the market was reported in August, we are also seeing demand increasing.
“This explains the ongoing upward pressure on prices. This is also a dynamic evident in the rental market.
“Anecdotal evidence points to the rental market continuing to face the same pressures on the supply front, which is pushing up rents.”
Stephen Lavery, local director, of Ulster Bank, said: “The findings of this month’s survey very much tally with our own experiences as the number of mortgage enquiries we are dealing with continues to rise.
“It is welcome that the latest survey reported a rise in supply as this was one of the biggest challenges facing potential buyers.
“Overall, the survey paints a largely positive picture of the local housing market and it is evident that recent cuts to interest rates are continuing to provide a boost to confidence and optimism levels.”
The next decision on interest rates is to be announced by the Bank of England’s Monetary Policy Committee on September 19.
The residential property price index from Land and Property Services, part of the Department of Finance, reported a 6.4% increase in the average house price here between the second quarter of 2023 and the same period in 2024, reaching £185,025.