Average Northern Ireland property prices are still 44% behind their pre-recession peak and house price growth is expected to remain below the other 11 UK regions until at least 2020, according to PwC’s latest UK Economic Outlook.
Based on actual transactions for the first four months of 2017, PwC forecasts that average Northern Ireland property prices will increase by around 1% in the year to December 2017. That compares with a forecast UK average increase of 3.7%, with growth of 5.3% in the East of England, the UK’s top regional property price hot-spot.
PwC says there has been a huge disparity in how the regional housing markets have performed since the recession. Whilst average house prices across the UK have grown by 17% since mid-2007, a quarter of UK local authorities are still experiencing average property prices below their 2007 figure. The region that has seen the greatest decline is Northern Ireland where on average, house prices are still 44% below their pre-recession peak.
In the decade between September 2007 and April 2017:
Looking forward to 2020, PwC’s Economic Outlook forecasts that the average Northern Ireland property will cost £134,000, just under 9% more than the 2016 average of £123,000. That’s also well below the UK average, where property process are expected to grow by around 36% between 2016 and 2020, making the average UK property worth around £274,000 by 2020.
PwC says that UK house prices were not impacted as quickly as expected by the UK’s decision to leave the EU though price growth stalled in the second half of 2016 and is now showing signs of a slowdown.
House price growth in London in the first four months of 2017 was less than a third of the equivalent in the first four months of 2016 - averaging around 4% compared with 13% growth in the same period last year. The average value of a home in London is now set to break the half a million pounds barrier in the next few years.
PwC expects the strongest price growth in the UK to be in the southern regions of England and the Midlands. The East of England is projected to see the fastest house price growth in 2017, at just over 5%, with Northern Ireland and the North East the weakest performing. While anticipating 1% year-on-year growth in 217, PwC’s forecasts suggest virtually no real growth in average Northern Ireland property prices in 2018.
Richard Snook, senior economist at PwC, said:
PwC’s recent Northern Ireland Economic Outlook looked at how much ground the local economy has made up as compared to the region’s peak economic performance, which occurred before banking crisis and housing slump that began in mid-2007.
The PwC NIEO recovery index suggested that, while employment has now passed the pre-crisis peak, real wages in Northern Ireland are still only 94% of their 2005 levels and real household disposable incomes are only 89% of their 2005 levels – that’s equivalent to an annual income cut of around £1,810.
The Outlook said that job creation is not being accompanied by a proportionate increase in wealth-creation, so further economic recovery will rely on an increase in productivity and knock-on increases in real wages and household incomes. The NIEO concludes that continuing to measure Northern Ireland’s economic recovery solely by employment levels, would be misleading.
PwC also said that Northern Ireland can expect economic growth of 1% in 2017, falling to around 0.9% in 2018.
Notes for editors
PwC’s UK Economic Outlook report is available to download from the link below.