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Last Updated: Wednesday, 28 February 2007, 06:53 GMT
'Hysterical' buyers driving market

By Yvette Shapiro
Business correspondent

Even estate agents are running out of words to describe the housing market in Northern Ireland.

They say buyers are becoming almost hysterical and that's driving property prices through the roof.

House prices
Northern Ireland's house prices continue to rise steadily

This is what they mean. There's a four-bedroom, three-reception detached house on the market in a fashionable part of east Belfast.

It went on the market recently at 495,000.

Four bidders dropped out when it reached 695,000. Six more are still in the running. The latest bid stands at 820,000. And it is unlikely to stop there.

No wonder that even the normally reserved Royal Institution of Chartered Surveyors describes buyer activity as "frenzied".

All over Northern Ireland, developers are cold-calling homeowners fortunate enough to occupy a generous site in a prime location.

In Bangor, a group of residents complained when developers turned up on their doorsteps over the Christmas holidays and asked if they'd be interested in selling their homes - all of which are substantial period properties with large gardens.

Perfect for another yet another set of townhouses and/or apartments.

Those who weren't "doorstepped" felt they'd even greater cause for concern.

"What if a neighbour sells up and I find myself living next door to 20 homes instead of just one," said an elderly lady.

In many areas, you'll find a row of houses, all displaying for sale boards in a row.

In some cases, neighbours have got together and decided to sell at the same time, a more attractive prospect for developers who are prepared to pay huge sums to secure a large site.

keys
First-time buyers are having to buy with friends

But in a seller's market like this, what happens to the buyers?

We've heard much about the plight of the first-time buyer, squeezed out of the market as prices soar.

Estate agents admit that often they've nothing at all on their books to show young house-hunters when they reveal their maximum spending limit.

Agents and lenders are increasingly seeing friends teaming up to buy properties which are out of the reach of a single person.

Volleyball coach Nick Wright already rents a flat with his best friend and team-mate, Mark.

Now they're buying a two-bedroom house in a new development in Carryduff for 250,000. They get the keys on Friday.

"When I was growing up, I could never have imagined that I'd be spending so much on a house," said Nick.

"But there's no way I could afford this on my own. I get on well with Mark and this is a good solution for us.

"Our plan is to live here for maybe two or three years. Then we'll maybe sell the house, split the equity and each go our own way into the property market, if that's possible."

Sarah Cole of BTW Shiells, who sold the house to Nick and Mark, says: "I'm seeing a lot of young buyers taking this approach.

"They have no choice. In this development there are also a lot of parents buying houses for their children - even though the kids are still too young to leave home.

"The parents are worried that if they don't act now and obtain a property, they won't be able to do it in four or five years when their children are ready for their own place."

Investors

So, what's fuelling the market and where's the money coming from?

Economists point out that Northern Ireland's market is growing from a very low start, where house prices were held down for so long by the Troubles and economic inactivity.

Now that peace and prosperity have taken hold, the market's racing to catch up.

Interest rates, although they've risen in the past six months, are still relatively low.

But the Bank of England will almost certainly put them up again in the near future, just to keep a hold on inflation.

That's something to bear in mind when your finances are already stretched to breaking point to meet repayments on a mortgage calculated on five times your salary (at least).

Investor activity is also exceptionally strong, particularly from the Republic.

And that's driving the buy-to-let market.

But housing analysts say the rental market is almost saturated and there are many vacant properties.

This, though, doesn't solve the problem of housing need.

People on the Housing Executive's homeless register can't afford much of the property on offer in the ever-growing private market.

They need affordable social housing, as provided by the Housing Executive and housing associations. But there's a dire shortage of units.

And don't forget the confidence factor.

The house price boom is a story that just keeps running. It seems people never tire of hearing how much more their property is worth this week.

Slow down

And with so many of us sitting on "equity mountains", or even becoming paper millionaires, it's not hard to see why people feel more comfortable with the concept of remortgaging to move upwards and onwards, to buy a second (or maybe a third or fourth) property, or to help their kids get a toe on the housing ladder.

Will the bubble burst? Not for the foreseeable future.

The economists, agents and lenders predict a significant slow-down in the market, with prices rising at a more modest 15% over 2007.

But it's worth remembering that forecasters are only as good as their last predictions - and no-one thought the Northern Ireland housing market would boom like this.


SEE ALSO
NI house prices rising by a third
05 Dec 06 |  Northern Ireland
NI house prices show sharp rise
04 Sep 06 |  Northern Ireland
Record rise in price of NI houses
03 Mar 06 |  Northern Ireland
House buyers 'must save longer'
08 Dec 04 |  Northern Ireland



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