Northern Ireland’s collapse in residential property prices is indeed worse than the Republic’s according to the latest University of Ulster’s house price series for quarter one of 2011 – the report is here and press release here. The report is produced in association with Bank of Ireland and the Northern Ireland Housing Executive (state body which controls 90,000 dwellings and employs 3,000 staff). The latest report shows that its index has fallen from a high of about 950 in Q3, 2007 to 531.51 today, a drop of 44% from peak – it should be said that the peak index is not quantified in the Q3,2007 report produced by the University of Ulster but is shown graphically, the Q2, 2007 index was 930.92 (we are 43% off that index today). In contrast, across the border, the Central Statistics Office say that prices in the Republic have only fallen 39.5% from peak. Indeed when you consider that inflation in the North has been positive for the past three years (there is a helpful graph of the Retail Price Index on the Housing Index graph in the University of Ulster report which evidences this) whereas we have had deflation for most of the past three years, it would seem to emphasise that the residential housing bust in the North has been more severe than here, by which I mean if you strip out inflation and measure real house prices, it seems that the drop in prices in the North is even more severe relative to here than nominal prices.
SoNorthern Irelandhas a more severe collapse in residential property prices, so what you might ask. Well, the North uses sterling as its currency and its monetary policy is set by the Bank of England. On this side of the border, we commonly complain of the ECB sitting on its hands in the 2000s whilst other countries poured cheap euro funds into our banks which then fell over themselves in offering mortgage credit on easy terms. There may be truth to that, but it would seem from our neighbour’s experience that this can’t be the only source of our woes.
As for the detail of the latest University of Ulster series, prices dropped 5.8% in Q1, 2011 and 15% from Q1,2010 but transaction volume picked up with 925 transactions in Q1,2011 versus 684 in Q4, 2010 and 799 in Q1,2010. Prices are now some 44% off peak in Q3,2007. The average price of a dwelling in the North is now GBP £143,918 (€163,519 at today’s exchange rate of GBP 1 = €1.1337). This compares with an average price this side of the border of €191,776 at the end of 2010, according to Permanent TSB/ESRI. The outlook in the North remains challenging according to the latest report.
UPDATE: 20th May, 2011. Although the decline in prices in the North might be greater than the decline in the Republic, it would seem that the declines are in the same ballpark (44% cf 40%). However figures released by the Northern Irish Court Service this morning (and reported here by the Belfast Telegraph) show that repossessions are in a completely different league. Some 542 homes were repossessed in the first quarter of 2011 in the North. That compares with a maximum of 140 in the Republic over the same period. Given that Northern Ireland has some 600,000 households compared to 1.5m in the Republic, it seems that the repossession rate in Northern Ireland is 10x that of the Republic.