House prices are still falling but demand growing

That’s down from £174,018 in the first quarter of the year, although the authors of the report point out at that fewer sales of detached houses (which cost an average of £225,917) helped to reduce the overall average price.

The overall average sale price fits into the trend across Northern Ireland of lower house prices when compared to the first three months of the year where there had been some evidence of an increase.

And the variable nature of the market is highlighted by the performance of semi-detached houses (£145,040) which is lower over the year but higher over the quarter.

On they plus side the Price Index, produced in partnership with Bank of Ireland and the Northern Ireland Housing Executive, showed evidence of growing demand in the local housing market in the second quarter.

The overall average price of a house in Lisburn is still among the highest in Northern Ireland with only neighbouring South Belfast being dearer.

Acorss Northern Ireland in the second quarter the average house price was £137,814, a decrease of over 15% on the same time a year ago. Quarterly performance is also weaker, with a weighted price decline of 2.4% in the second quarter compared to the first three months of 2011.

According to the authors of the report Professor Alastair Adair, Professor Stanley McGreal and Dr David McIlhatton the number of sales are at their highest since the end of 2007 as purchasers “avail of the current affordability and value for money in the local market”.

They said: “The continuing growth in transactions is welcome news for the local market and while there is still some considerable distance to travel it is a positive pointer towards the first signs of recovery in the local market. The expectation is that as demand starts to return to the market that price levels will follow but with an inevitable time lag.”

Referring to the annual decline of more than 15% in prices, the authors said the figure was comparable to that in the second quarter of 2010 which coincided with the formation of the coalition government.

Alan Bridle, UK Economist, Bank of Ireland UK, said: “While the market still faces into significant headwinds in 2011, there is now more tangible evidence of ‘demand at the right price’ which represents some improvement on the very difficult conditions of the last few years.”

The Housing Executive’s Head of Research, Joe Frey, added: “The higher volume of transactions during the second quarter of 2011 is good news. However, it is important to be cautious. The full effects of the public expenditure cuts – including significant reductions in Housing Benefit expenditure have yet to be felt. The reduction in purchasing power that will result from these is bound to impact negatively on the market.”