NI Recovery Could Take 10 Years

It could take ten years before Northern Ireland's property prices return to pre-crisis levels, according to the latest UK Economic Outlook (UKEO) from PwC.

PwC says property prices recovered "only modestly" throughout the past year and are still around half their August 2007 peak.

This is in contrast to average prices in Scotland, which are only 4.7% below their peak. In Wales the gap is 3.5%. London property prices are currently 32% above the pre-recession peak, with the South East just over 7% ahead.

The UKEO warns that Northern Ireland’s "depressed" property market, combined with the lowest levels of disposable income amongst the 12 UK regions and high levels of negative equity, will "contribute to a slower economic recovery than experienced by other UK regions".

PwC estimates that the NI economy grew 1.1% in 2013, making it the lowest among the 12 UK regions.

It said that, while this is expected to double to 2.2% in 2014, it is also the lowest UK regional growth, just over two-thirds of the UK’s 2014 projected growth of 3%.

PwC’s Northern Ireland chief economist, Dr Esmond Birnie, said: "Our nominal property price projections for the UK and its regions suggest that it could be at least 2024 before Northern Ireland property prices return to their pre-crisis levels.

"Interest rates are expected to rise during 2015 and this, combined with our proportionally low disposable income and high percentage of negative equity, will represent a substantial call on future workforce earnings.

"Collectively all these factors have contributed to relatively low levels of demand and only as the legacy of the property bubble and the accompanying debt overhang are worked out of the system will we see increasing domestic demand and accelerated recovery.

"That’s despite remarkable work by Invest Northern Ireland recently in delivering some stellar investment projects; however, we should remember that these are announcements - the jobs and their resulting revenues – won’t be on the ground for some years.

"Collectively, growing levels of business investment, a steady recovery in the housing market and a reduction in the housing debt will contribute to accelerating recovery, but the impact of these factors means that recovery will be slower to emerge and will be more prolonged than elsewhere."

(IT/CD)