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07/12/2007
Interest Cut Too Late For NI Property Market?
The Bank of England's quarter-point cut in interest rates to 5.5% is this week being seen as an attempt to stave off the threat of a severe economic downturn next year.
But could it be too little, too late for Northern Ireland's rapidly cooling market?
The move was presaged by ominous warnings over worsening market conditions, which the banks said would make it more difficult and more costly for individuals and companies to borrow money.
Commentators said that house price inflation is expected to drop from the current rate of 9.7% to 0% by this time next year
While Scotland is forecast to have the strongest house price growth in 2008, prices in Northern Ireland are forecast to fall from current 'dizzying heights'.
According to Fionnuala Earley, Nationwide's Chief Economist: "Northern Ireland has quickly become the least affordable UK region for first-time buyers.
"This is due mostly to the phenomenal house price growth that the Province saw in 2007," she commented.
"At the end of the third quarter, prices were up by over 40% year-on-year, while earnings growth remained in the low single digits," the expert continued.
"At this stage, it appears that there has been some overshoot of house prices in Northern Ireland, and that there will be some falls next year.
"Our forecast is currently for a 5% decline, which would make the Province the worst-performing region for 2008, but still leave it the best-performing region over a two-year period."
However, in counterpoint, the scrapping of the 11-plus transfer test and increased emphasis on 'geographical' factors in determining which post primary school a child will attend is being seen as one potential fillip for a flagging housing market.
Michael Young, a partner and director at estate agency group Templeton Robinson in Belfast said if kids are directed to their local school - irrespective of preference - it will lead to a hotting-up in demand for property in areas close to the province's top schools.
"Education has always influenced where families want to live and as a consequence properties near our top schools have always been sought after," he said.
Another property professional also sees the rate cut as major boost - rather than being 'too little, too late'.
Director of Belfast agency, Property One, Steve McGuinness, said the new rate is good news for investors who will want to get back into the marketplace. He warned, however, first-time buyers need to act quickly: "When I hear what sellers are accepting, it is really low," he said.
"I think now is a good time to buy and seasonality has come back into the market again."
The rate adjustment to 5.5% coupled with rising rents will also mean borrowing is a better option than renting, he claimed.
The rate move was also welcomed by Ben Collins, Royal Institution of Chartered Surveyors Northern Ireland director, who said it would provide some relief to homeowners due to refinance their mortgages.
(BMcC)
But could it be too little, too late for Northern Ireland's rapidly cooling market?
The move was presaged by ominous warnings over worsening market conditions, which the banks said would make it more difficult and more costly for individuals and companies to borrow money.
Commentators said that house price inflation is expected to drop from the current rate of 9.7% to 0% by this time next year
While Scotland is forecast to have the strongest house price growth in 2008, prices in Northern Ireland are forecast to fall from current 'dizzying heights'.
According to Fionnuala Earley, Nationwide's Chief Economist: "Northern Ireland has quickly become the least affordable UK region for first-time buyers.
"This is due mostly to the phenomenal house price growth that the Province saw in 2007," she commented.
"At the end of the third quarter, prices were up by over 40% year-on-year, while earnings growth remained in the low single digits," the expert continued.
"At this stage, it appears that there has been some overshoot of house prices in Northern Ireland, and that there will be some falls next year.
"Our forecast is currently for a 5% decline, which would make the Province the worst-performing region for 2008, but still leave it the best-performing region over a two-year period."
However, in counterpoint, the scrapping of the 11-plus transfer test and increased emphasis on 'geographical' factors in determining which post primary school a child will attend is being seen as one potential fillip for a flagging housing market.
Michael Young, a partner and director at estate agency group Templeton Robinson in Belfast said if kids are directed to their local school - irrespective of preference - it will lead to a hotting-up in demand for property in areas close to the province's top schools.
"Education has always influenced where families want to live and as a consequence properties near our top schools have always been sought after," he said.
Another property professional also sees the rate cut as major boost - rather than being 'too little, too late'.
Director of Belfast agency, Property One, Steve McGuinness, said the new rate is good news for investors who will want to get back into the marketplace. He warned, however, first-time buyers need to act quickly: "When I hear what sellers are accepting, it is really low," he said.
"I think now is a good time to buy and seasonality has come back into the market again."
The rate adjustment to 5.5% coupled with rising rents will also mean borrowing is a better option than renting, he claimed.
The rate move was also welcomed by Ben Collins, Royal Institution of Chartered Surveyors Northern Ireland director, who said it would provide some relief to homeowners due to refinance their mortgages.
(BMcC)
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Northern Ireland WeatherThis Evening and Tonight:A dry night, save for a few light showers around the coasts, with prolonged clear spells and light winds bringing a frosty dawn for many in central and southern parts. Minimum temperature -3 °C.
