Northern Ireland’s housing market continued to grow through the third quarter of 2024 – but the latest Westminster budget could lead to a ‘mortgage bomb’, according to experts.
The 40th year of the House Price Index produced by Ulster University has revealed high levels of consumer confidence and market activity.
The latest Northern Ireland Quarterly House Price Index Report (NIQHPIR) highlights strong buyer demand against a limited supply, driving up the average house price to £219,110 — a quarterly increase of 3.4% and a 5.7% rise compared to Q3 2023.
Transaction activity remained strong, with 65% of agents reporting a rise in sales completions from the previous quarter.
The upward trend in demand appears to be influenced by a shift toward higher-value properties, with transactions of homes priced over £300,000 increasing by 12% year-over-year.
By contrast, the share of sales for homes under £150,000 dropped by 3%, with homes below £100,000 now making up only 9% of transactions, underlining affordability challenges for lower-income buyers.
Research shows the terrace/townhouse sector of the market had the most significant price increase quarterly by 4.6%, and annually with an increase of 8.2%, meaning an average price of £150,836.
Detached properties displayed a price growth of 3.6% with an average price now £325,641.
Prices for semi-detached homes grew 3.3% showing an average price of £200,323.
Apartments saw price growth of 4.1% with an average price of £162,709.
Overall, the annual rate of price change exhibits an unweighted increase of 5.8% compared to Q3 2023 levels.
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Lead researcher Dr Michael McCord, reader in valuation, investment and finance at Ulster University, stated: “The housing market continues to see strong demand and price growth over Q3 2024 as it navigates its way through the changing political and economic landscape.
“Market activity across the year has remained buoyant and the reduction of new listings and ongoing lack of supply within the market will continue to help prop up house prices as we enter the final quarter of the year.
“However, the latest budgetary announcement will invariably have an impact upon housing market activity as these latest fiscal and tax changes start to take effect.
“The upward movement in bond yields in light of the announcements has the markets unsettled, and government may have underestimated the market’s desire to absorb more sovereign debt issuance which will undoubtedly curtail any immanent interest rate cuts and may result in lenders increasing their mortgage interest rates.”
The report says budgetary and fiscal changes have meant a number of mainstream lenders have already begun to ‘hold’ or increase fixed mortgage rates as swap rates – the principal pricing mechanism for brokers – due to concerns over the level of government debt and increases in government borrowing as a result of the latest budget announcements.
“These changes will inevitably have an effect on the level of borrowing and market activity over the final three months of 2024, and a ‘mortgage bomb’ may once again be on the horizon when the budget announcements start to feel its effect upon housing market participants over the rest of 2024 and into 2025,” the report added.
The phrase mortgage ‘ticking timebomb’ was coined by consumer champion, Martin Lewis, to highlight the problem of borrowers struggling to afford mortgage repayments once their cheaper fixed-rate deals come to an end.
The increase in stamp duty land tax on second homeowners may impact upon market activity and pricing levels in particular regions of the province.
Other proposed tax changes by the Finance Minister at Stormont – namely, to lift the cap on the rateable value for domestic properties in 2025 – will also have an impact upon housing market activity levels and pricing, if successful.