Belfast bidding wars, “legacy issues” and the political crisis at Stormont are overshadowing what is traditionally the busy autumn house-selling season in the North, according to industry insiders.
The North is currently forecast to have one of the highest rates of house-price growth in the UK this year.
The Royal Institution of Chartered Surveyors (RICS) estimates that average prices could be 11 per cent higher by the end of this year compared to last year’s prices.
What this means, according to a 20-year veteran of the North’s property market, is that in some areas – chiefly what he describes as the employment corridor of Belfast, Lisburn and North Down – there is currently more demand than houses for sale.
Samuel Dickey, who is the RICS spokesman for Northern Ireland, says this has led to the emergence in certain price brackets of bidding wars in Belfast again, a phenomenon not seen since the local brutal property crash of 2007.
But he is not predicting that a new property bubble is about to develop soon because he says this time around the “buying public are much more educated”.
“This is a completely different scenario than before and price-wise we are coming off a very low base – house prices in Northern Ireland are recovering from a massive fall, in some instances they fell 50 per cent below their peak. And there is also the issue of negative equity in Northern Ireland.
Responsible
“I believe everyone from buyers to estate agents and surveyors are much more responsible today. There may be a lack of supply in some areas but there is also an awareness that the market has to grow at a sustainable level, we’re not out of the woods yet,” Dickey says.
He believes that “legacy issues” overhanging from the North’s short-lived property boom are just one of the factors dominating the local property market.
“There is a lack of house-building in Northern Ireland, particularly when it comes to starter homes, and there are number of reasons for that. We all know there are some developers who are still coping with the legacy of debt.
“There is also financing issues for companies that want to develop but cannot get financial backing from the banks who do not want exposure to the property sector, and then there is also the question of planning in Northern Ireland – we don’t have enough land available for development –and it’s all of these factors that contribute to why the housing market is where it is at the moment,” says Dickey.
According to the Belfast-based estate agent and chartered surveyor, one of the industry’s most immediate concerns is the current political situation in the North which Dickey claims always has a bearing on the local property market. No one, he says, wants to take out a 25-year mortgage in an atmosphere of uncertainty where they want to make their home.
According to David Fry from the Construction Employers Federation (CEF), which represents 1,200 firms in the North, the construction industry is also fed up with Stormont on a number of fronts.
Fry says while the pace of private house-building may remain subdued because of debt issues from the boom, there is also the big question of confidence in the economy.
He says investors are wary of the political deadlock which in itself is not helping to support any recovery in the local construction sector because the Executive cannot take key spending decisions.
Survive
A recent survey of the North’s construction companies by the CEF and PwC showed that many firms have had to move the focus of their business outside of the North simply to survive.
Fry says budget cuts and public sector constraints – plus the Executive’s inability to agree spending programmes – have left the local construction industry in limbo. What this has done has forced Northern businesses to seek work and contracts elsewhere.
Fry says that while some local construction firms have once again ventured across the Border, particularly to Dublin, this time the exodus has been further afield.
“The reality is there has been a shift outside of Northern Ireland to Britain. Local construction companies are now doing huge volumes in cities like London and Manchester, and particularly in the southeast of England. Last year we estimated that the largest local construction companies generated 85 per cent of their turnover – over £1 billion – outside of Northern Ireland.”
