This week’s Irish News ran a story highlighting that leading economist Richard Ramsey was warning that there is a slowdown in the housing market in Northern Ireland. The most recent NISRA statistics show that house prices increased 3.5% across the whole of Northern Ireland since last year. What this doesn’t explore is that the increase ranged from 1.4% in Fermanagh and Omagh District Council to 9% in Newry, Mourne & Down District Council.
Source: Annual Change in House Price Index by Local Government District Q2 2019, NISRA
The benefit of rising house prices is not therefore something that everyone will be feeling the benefit of and unfortunately the quarterly change in the house price index from quarter 1 to quarter 2 of 2019 was only an increase of 0.8%. This is similar to the position across the UK as the UK average increase was only 0.9%.
What this means is that the rise in house prices is slowing again and this is before we look at the figures for house sales. The initial estimate of houses sold in Northern Ireland in the second quarter of 2019 is only 5,210. While there is likely to be some increase as late sales still have to be notified to HMRC, it is unlikely to increase to the levels of April 2018 when 6,189 sales were recorded. It is also clear that the ability to sell depends greatly on the value of your home with 85% of sales in quarter 1 of 2019 being houses with a market value of less than £200,000 and only 5% were over £300,000.
How is home equity calculated?
Home equity is calculated by subtracting the amount you still owe on your mortgage from the current market value of your home.
Can you have negative equity?
Yes. With standard loans, your home equity will increase over time. With negative-amortizing loans — a loan with monthly payments less than the interest rates — your equity decreases over time as your owed balance increases.
Source: UK House Price Index Summary, June 2019
The UK Property Transactions Statistics for June 2019 showed that transactions fell by 9.7% from May 2019, so the slowdown in purchases appears to be underway already. Put simply, looking at all that information, the statistics appear to be showing two key things – house prices are now rising very slowly and less people are buying. The August inflation report from the Bank of England agreed with this assessment and described signs that the housing market had stabilised but then noted that 20% of households who expected to move in the next two years had delayed their move due to Brexit-related uncertainty.
So unless you have a reason to move, you probably won’t at the moment. Lots of people are unclear how Brexit will affect them personally and uncertain people tend not to move house. If you are in the unfortunate position of needing to move because your circumstances have changed, Negative Equity NI (part of the CD Fairfield Capital group) have helped over 750 local home owners & landlords to move on even if their mortgage is in Negative Equity.