BELFAST BRIEFING:LATEST GOVERNMENT statistics show that Northern Ireland has suffered the biggest drop in property prices across the UK.
While prices in England rose year on year by 2.1 per cent, in Scotland by 0.5 per cent and in Wales by 1.4 per cent, they plummeted 12.8 per cent in the North in the 12 months to August.
Not only have house prices slumped but the market is being suffocated because even people who want to buy property are having major difficulty raising the necessary finance to do so.
The knock-on effect is that the local housing market is paralysed – people are reluctant to sell at current prices, and potential buyers are struggling to raise the cash to buy. It is a vicious circle.
The construction sector is one of the major casualties of the malaise and is still suffering, according to the Construction Employers Federation. It has warned that “urgent measures” need to be introduced to boost the volume of new homes being built in the private sector.
Its own research shows that every £1 million reduction in construction output results in the loss of more than 28 jobs and takes £3 million out of the wider economy.
So is there a sticking plaster for the North’s housing woes and its ailing construction sector? According to one academic, the solution is simple – build more houses. Peter Shanks’s theory may, at first glance, fly in the face of logic: there are thousands of houses that people cannot sell at the moment in Northern Ireland, so why build more?
Shanks, a lecturer in housing studies at the University of Ulster, says current housing market conditions and the broader economic situation are “intrinsically linked”. He believes a major programme of investment in new housing but, in particular, affordable and social housing would deliver benefits right across the North. “Investment in housing boosts the economy and delivers more jobs than other capital-investment programmes. It also sustains jobs elsewhere in the economy,” Shanks says.
Research by University of Ulster academics suggests investment in housing projects produces a “local economic multiplier effect”. The academics argue this is because housing projects create local employment opportunities and ensure investment is retained in the local and regional economy.
Shanks says: “It is estimated that, for every 10 jobs created as a result of social housing and affordable housing projects, seven jobs will be sustained elsewhere in the economy.
“Retro-fitting houses for social and affordable housing schemes can also generate a strong multiplier effect for the local economy.”
He believes now is the perfect time to increase investment in affordable and social housing because of land and construction costs today compared with five years ago.
Earlier this month, the Minister for Social Development launched a consultation on Northern Ireland’s first housing strategy. Nelson McCausland said he wanted everyone to have access to good, quality housing at a reasonable cost.
“It is a vision that recognises the significant role housing could play in helping support and sustain economic recovery, create employment and help to regenerate some of our most deprived and neglected communities,” Mr McCausland said.
According to latest estimates, there are about 37,000 households currently on local waiting lists when it comes to demands on social housing.
The Department for Social Development said only 7,000 new units or so have been built annually in recent years, which means demand for social housing in the private sector has increased.
The department is looking at innovative ways to help families who want to buy their own homes. One scheme it is examining is the potential to establish an interest-free loan fund in the region of £19 million.
If the department can secure £19 million in funding, it wants to create a pilot affordable homes loan fund to support registered housing associations to build more affordable housing for shared ownership. Creating a home for families in Northern Ireland might just help regenerate the local economy.
