House prices 'start to recover'

Prices are still far below their peak in 2007

House prices in Northern Ireland have risen for the first time in two years according to the latest Nationwide building society figures.

It said prices were up by 9.7% over the last three months, however they are still down 8% on this time last year and down 35% from their peak in 2007.

The study puts the average house price in NI at £147,204.

Nationwide said the softening in the year-on-year rate of price decline may indicate improving affordability.

"The ratio of house prices to earnings is now broadly in line with that for the UK as a whole, having been well above the UK average for most of the last two years," said the Nationwide's chief economist Martin Gahbauer.

Mr Gahbauer suggested that any recovery is not being spread equally across Northern Ireland.

Unemployment

"The Northern Ireland (West) sub-region saw the largest annual fall in house price this quarter and has also been the worst performing area over the last two years," he said.

The more fundamental reason why prices might start falling again is that, by most measures, they are still significantly over-valued Stephanie Flanders, BBC economics editor Read Stephanie's blog in full

"Elevated levels of unemployment in parts of the area are likely to have had a negative impact on prices."

The Nationwide figures are produced from Nationwide mortgage data. The data is extracted monthly for mortgages that are at the approvals stage.

This is the second report in recent months to suggest that the Northern Ireland housing market is showing tentative signs of recovery.

A University of Ulster/ Bank of Ireland survey in August showed that house sales were increasing with prices moving up slightly.