House prices rise just £692 over year

But over the last 12 months the local housing market has been woefully sluggish for those wishing to sell with the average house price hardly rising since this time 2009.

The latest quarterly University of Ulster House Price Index, produced in partnership with Bank of Ireland and the Northern Ireland Housing Executive, shows that in Londonderry and Strabane the average house is now selling for 147,692 - just 692 more than it was this time last year.

The quarterly bounce back (30,000) in the North West can be partly explained by the rise in the number of surveyed estate agents reporting transactions involving more expensive detached houses and bungalows and the absence of any reported sales of terraced houses over the third quarter. This marks a change from the summer when the opposite was true. Consequently, house prices here have therefore recovered to the level they were at in November 2009.

The report noted the overall average of 147,692 in Londonderry/Strabane was up by 0.5 per cent (692) over the year. Compared to the second quarter of this year, prices have generally increased and were bolstered by the detached house market where the average price was 195,350.

The recovery in Londonderry house prices following the 30,000 collapse last quarter somewhat disguises the stagnation of the housing market over the past 12 months.

Londonderry also appears to have bucked the trend across Northern Ireland where prices declined nearly everywhere else over the year including in Limavady.

For the Coleraine/Limavady/North Coast region the overall average price of 153,884 was down over the year by 7.6 per cent although some property types increased - semi-detached houses went up 9.2 per cent to 141,450 – while others declined, such as detached houses down by 7 per cent to 240,167.

In general the average house price in Northern Ireland fell below 150,000 for the first time in nearly five year to 148,243. This represented a weighted rate of annual decline of 7.6 per cent.

The authors of the report - Professor Alastair Adair, Professor Stanley McGreal and Dr David McIlhatton - said: "The significant fall in house prices stems from a current lack of confidence in the market possibly reflecting concerns about public spending cuts and their impact on jobs in a region highly dependent on public sector employment."

The price statistics are based on 795 transactions in the third quarter of 2010, a figure well down on the second quarter volume of 1009 transactions.

Alan Bridle, UK Economist, Bank of Ireland, said: "With the average price below 150,000 for the first time since the last quarter of 2005, it is clear the residential market is still facing a number of challenges.

"Potential buyers remain discouraged by uncertainty over economic prospects and in terms of supply there is no shortage of houses available to buy or to rent. "A particular theme of this survey is that the previously resilient market in Belfast has been less strong in the third quarter – and turnover of properties remains weak by historic standards."

The survey indicated that the market is becoming increasingly affordable, with more than a quarter of houses selling at or below 100,000. Collectively, nearly two thirds of the total sold at 150,000 or below.

The Housing Executive's Head of Research, Joe Frey, commented: "Given the fragility of Northern Ireland's economy and the imminent cuts in public expenditure, it is little wonder that the housing market is turning down again. However, despite the resultant lower house prices, affordability will remain a difficult issue for first time buyers for as long as banks and building societies continue to allocate mortgages on the basis of very restrictive lending criteria."