The air continued to come out of the regional housing balloon in the last quarter according to the latest University of Ulster Quarterly House Price Index, produced in partnership with Bank of Ireland and the Northern Ireland Housing Executive. Indeed, the evidence from the survey suggests that the rate of deflation really accelerated in the three-month period to the end of September, both in terms of price and volume of transactions.

The survey showed the overall average price of a house in the third quarter this year was £203,775 compared to more than £250,000 in the third quarter of 2007.

Apartments but represented 31% of the total transactions and prices rose by 10%, influenced by the new building activity in Belfast and despite developers discounting the price of new property.

The economist Alan Bridle, Head of Research at Bank of Ireland Northern Ireland, said: “Northern Ireland’s journey to more affordable housing continues in terms of the ratio of house prices to earnings – a welcome development for many – but the price reductions to date have not been accompanied by an increase in market activity. 

The Housing Executive’s Head of Research, Joe Frey, commented: “It is vital to keep things in perspective.  The ‘irrational exuberance’ of the eighteen months before the summer of 2007 was a serious aberration in terms of the longer term development of a sustainable housing market.  The market is currently undergoing a significant correction.  We need to ensure scarce resources are focussed on providing a safety net by building enough new social dwellings and alleviating the pain of those directly affected by the downturn, through for example the proposed Mortgage Rescue Scheme”.

Earlier this month the Bank of England slashed the policy base rate by 1.5 percentage points to 3% and a further reduction in base rate to 2% or less now seems likely. This will come as welcome relief to many existing mortgage borrowers already on the housing ladder although the critical issue of affordability for many potential new borrowers is one of securing the initial deposit.

The growth in the private rental sector, steep decline in First Time Buyer numbers over the last 3 years and the underprovision in the social sector all suggest significant “pent-up” demand for housing at affordable prices.

Read the latest Northern Ireland House Price Index for Q3 2008

Source: http://www.propertynews.com//blog/781/

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