12 November 2009
An industry report has recently claimed that it is unlikely that homes in Northern Ireland will see any price increase next year. The report was released by Davy stockbrokers, and claims that even if there is a property value increase it will not be a significant one.
The report has put this situation down to a number of different factors, which have been outlined in the report. One official from the firm has even said that there is evidence to suggest that property prices in Northern Ireland could actually continue to fall.
Amongst the factors that have blamed for property prices in the area not rising by any significant level next year are poor availability of credit, higher taxes and interest rates, poor loan to value rations, and the likelihood of rising unemployment, all of which will take their toll on the property market.
An official from the group said: “There are a number of factors that will keep prices under pressure.”
He added: “Obviously bank finances not as readily available as they once were and even when the credit market starts working again, we don’t believe the kind of salary multiples that were once being lent to people will arise again. The current and future cost of credit is going to be an issue as well. Clearly there is the perspective that interest rates will rise, although that is not to say that they will rise aggressively in the next 12 months.”
He went on to state: “And even with low interest rates we are not necessarily seeing that reflected into mortgage rates for two reasons. A lot of people had fixed their mortgage rates before this drop in interest rates and have not had that passed onto them. Secondly margins have gone through the roof, 3.5% over base would be a typical tracker mortgage. So it is clear that while we are in a period of low interest rates, the affordability of mortgage payments has not come down to the same extent. There is also concern about tax. There is an expectation that tax is going to have to rise in the UK and therefore he disposable income people have will be reduced. There are also threats around unemployment people don’t want to be committing to a new house or larger mortgage if they are worried about their job.”
Tags: northern ireland house prices