Home Sales Turnaround Coming?

The rapidly cooling housing market may be getting a boost with predictions that house sales in Northern Ireland are set to increase this year - confounding predictions of a slump.

The Royal Institution of Chartered Surveyors (RICS) has predicted there will be resurgence in the province's housing market with property transactions set to rise – possibly also helped with a widely expected cut in interest rates.

This is welcome news for beleaguered sellers who have witnessed a market turnaround from the bidding wars and spiralling prices of 2006.

Some properties fell in price by up to £20,000 on their value at the peak of the house price boom in January 2007.

Average prices in Northern Ireland fell by 0.2% during the last three months of 2007, according to Nationwide, which led the lender to predict a 4% fall in prices over the coming year.

However, RICS now predicts the market will remain buoyant - with average prices expected to return to an upward trend in the next 12 months.

The province enjoyed the highest annual house price growth in the UK during 2007, at 24.2% - or £120 a day.

"Northern Ireland experienced massive house price growth in 2006 and 2007 driven by a perceived lack of supply, a burgeoning economy and investor enthusiasm," said Mr Tom McClelland, a housing spokesperson for RICS Northern Ireland.

"House prices grew rapidly from a low base, supported by increasing confidence in a society more at peace with itself and a strong jobs market."

While growth is not expected to match the levels seen over the last two years, transactions will increase and the market will remain strong, according to RICS.

"The market changed considerably during the course of 2007 and the new reality is a market where agents have to work harder to achieve sales and sellers have to be more realistic about asking prices," added Mr McClelland.

He said: "We anticipate that transaction numbers will increase in the first half of 2008, supported by the recent interest rate cut and potential cuts in the coming months."

Indeed, a slowing of the market could prove beneficial to some groups: "Ultimately first-time buyers could benefit from the change in the market. With investor activity having declined, there is less competition for properties in the sector of the market within the first-time buyer's budget."

And industry sources are still predicting interest rate drops for later in the year, despite the Bank of England freezing the base rate at 5.5% last week.

(BMcC)