The price of former owner-occupier houses in Northern Ireland has risen a third since pre-COVID
The housing market in Northern Ireland has continued to push higher in recent months despite growing concerns around the cost-of-living.
Over the past 12 months, Northern Ireland has seen a 14.3% increase in the price of former owner-occupier houses, the largest increase across all UK regions.
“Compared to pre-pandemic levels, the price of former owner-occupier houses in Northern Ireland has rocketed by a third, far above the house price increase witnessed across any other region of the UK,” said Philip Anderson (pictured), lending manager in Northern Ireland at Blend Network.
Anderson explained that the historical pressure of housing supply in Northern Ireland is part of the reason.
He outlined that the Minister for Communities Deirdre Hargey has spoken of the need to deliver 100,000 homes over a 15-year period. According Hargey’s housing supply strategy, she believes the development must primarily engage with those who are in the direst need for housing or new housing.
The approach is built on the principle that those who are most affected by poor housing are best placed to help design or redesign it.
“However, following a multi-year declining trend, the total number of new dwelling completions in Northern Ireland in the first three months of the year plummeted to 1,571,” Anderson added.
This was down by 12% compared to the first quarter of last year and down by 16% compared to 2019.
Anderson believes the sharp decline in Northern Irish housing completions has been driven by the fall in private owner and speculative developments since 2019. Over the past 12 months, he noted that the number of these housing units completed was down by 18% and the number of completions had dropped by a quarter since 2019.
Meanwhile, the number of social housing development units completed rose by over 50% over the past 12 months and has doubled since 2019.
“The price of existing housing stock in Northern Ireland has increased by a third compared to pre-pandemic levels, far above any other UK region,” said Anderson.
While the home building sector in Northern Ireland is comprised of several large private developers and housing associations, Anderson said there are many small developers who are well placed to put a high value on quality projects and who can develop smaller sites, which he believes is an essential aspect to any housing strategy.
Still, they face their own issues.
“Smaller property developers face a number of old and new challenges such as lack of access to small sites, an onerous planning system and now shortage of labour and increasing cost of materials,” Anderson explained.
Despite the role of small and medium-sized developers in helping solve the housing crisis, Anderson said they have faced challenges in the past when attempting to access finance.
According to Anderson, that is why, throughout the past few years, in the absence of the mainstream lenders in the Northern Irish market following the Global Financial Crisis of 2008-09, specialist lenders have stepped in to support SME developers by providing pockets of flexible capital to experienced property developers.
“Specialist lenders are flexible, nimble and agile organisations that offer higher flexibility and one-on-one customer relationships compared to traditional lenders,” he said.
More importantly, Anderson believes specialist lenders are also able to offer higher gearing compared to what traditional lenders offer and what property developers often require.