The Northern Ireland housing market has shown signs of improvement in the first three months of 2017. There are now high hopes that the market has turned and the rise in prices will continue for the rest of the year. This data was provided by RICS and the Ulster Bank Residential Market Survey which gives a great insight into the market. So, why is the Northern Ireland property market improving?
A new political dawn
There have been some well-documented political issues in Northern Ireland of late and the recent elections gave a significant boost to the Nationalists. As of yet no agreement has been reached on a new assembly and time is running out. On the surface, against this difficult political backdrop, it is a little strange that the property market is showing signs of recovery. We can only hope that these issues do not curtail the ongoing recovery which has been a long time coming.
The UK government is set to trigger Brexit negotiations which may actually prompt calls for a united Ireland. This would be a bitter blow to the UK Union especially with Scotland on the verge of announcing a second independence referendum. Could it be that renewed hope Northern Ireland can retain access to the European single market is fuelling demand for property?
Property sales figures increasing
While the newly agreed sales figures for February were only modestly up on the previous month they are at least moving in the right direction. This will place upward pressure on prices and there are also concerns that supply constraints are not improving. The Northern Ireland property market, like others in the UK, was hit hard by the 2008 economic downturn and has struggled to recover. Financial pressure on the property development market saw many investors rethinking their position which has led to the constraints in supply. In theory this could be giving an artificial boost to property prices in the short term until supply increases.
It was also interesting to see that the Ulster Bank reported strong demand for new mortgage arrangements with the ongoing low interest rate environment proving very helpful. UK base rates are unlikely to rise significantly for the foreseeable future so this low interest rate/cheap finance environment we see today is likely to continue.
Will Brexit eventually hit home?
The subject of Brexit has been mentioned right across the UK with regards to property markets which remain relatively strong with the exception of Scotland. Scotland has its own issues with a second independence referendum on the cards but the rest of the UK seems, at this moment in time, relatively untroubled by the forthcoming exit from the European Union. Some experts believe the markets have yet to realise the full potential, the full horror in some cases, that Brexit will create as and when Article 50 is triggered.
However, it is also worth noting that the reduction in the British pound has made UK property on the whole more attractive to overseas investors. The Irish government has been particularly active with regards to reduced corporation tax as a means of attracting new investment and new businesses. It will be interesting to see how the Irish authorities react with the UK government also promising a reduction in English and Welsh corporation tax rates in the short term.