Annual house price growth of houses has remained more stable at 2.0% compared to apartments whereby prices have fallen by 2.1% over the previous 12 months.
But the Covid-19 pandemic and associated lockdown measures significantly reduced the volume of available properties advertised. In total there were 2,762 properties added during Q2 2020 – approximately 64% less than the same period in 2019.
The rental market, meanwhile, has remained buoyant throughout lockdown as typical rents accelerated by 1.4% over the previous 3 months and an annual rate of 2.9%. The average rent in Northern Ireland is £648 per month, of which houses are £639 and apartments £667.
Jordan Buchanan, Chief Economist at PropertyPal commented on the performance of the housing market during the second quarter of the year:
“Covid-19 has had a profound and immediate impact on the Northern Ireland economy and housing market. It is clear we are in the midst of a deep recession and is unsurprising that there has been some housing market impacts.
“House prices fell by approximately 0.4% during the previous 3 months, however the downward pressure was more significant for apartments, whereby prices fell by 3.0%, perhaps reflecting new demand patterns.
“As lockdown measures continue to ease, the near-term housing market activity remains relatively positive. Transaction levels are picking up and homebuyers have revaluated their housing needs in light of Covid-19. Nonetheless, the medium-term outlook remains highly uncertain. Much will depend on how quickly the economy recovers which in turn depends on how the pandemic and restrictions on activity develop.
“The Chancellor, Rishi Sunak, has announced a suite of policies to stimulate the economic recovery with targeted support for job creation and incomes. The housing market will also benefit through the abolition of stamp duty (for properties up to £500,000). This will cover more than 99% of transaction activity in Northern Ireland and may stimulate some wider consumer confidence. However, ultimately the cost and availability of mortgages are critical components in the housing market recovery. Whilst costs of financing remains at ultra-competitive levels due to low interest rates, there has been a range of announcements from major lenders that they are limiting the availability of ‘high risk’ mortgages (those with less than a 10-15% deposit). Locally, approximately 1 in every 3 new issued mortgages is for first time buyers with less than a 15% deposit. It is paramount that lending returns for this cohort or there will be added pressure on rental demand and subsequent impact on homeownership rates.”
Jordan further commented on the performance of the rental market:
“The rental market has remained buoyant in the second quarter of 2020 and in times of economic uncertainty is typically favoured over the sales market. Lockdown measures resulted in a reduced supply of properties available alongside an increase in demand. This dual supply and demand shock led to an immediate upward pressure on rents. The medium-term outlook for rents remains uncertain and is unlikely to be a universal impact as certain property styles may be more in demand than others.”
PropertyPal's Jordan Buchanan