NORTHERN IRELAND could experience the biggest drop in house prices across the whole of the UK this year, according to one of the region’s biggest mortgage lenders.
The stark warning from the Nationwide Building Society comes as its latest monthly figures show UK house prices fell sharply in May.
Nationwide’s new research suggests house prices in the UK fell by 2.5 per cent this month, the largest recorded monthly fall in 17 years.
Fionnuala Earley, Nationwide’s chief economist, said its latest house price review incorporates sales from its Northern Ireland operation.
Ms Earley believes the housing market in the North is now the weakest in the UK.
“Northern Ireland has experienced significant house price falls compared to other regions in the UK and there are number of reasons for that.
“There was a period of record growth in house prices in Northern Ireland, there was a lot of speculation in the market, and there was also an element of catch-up compared to where house prices had been”.
But she said this could not continue because of the dynamics of the market place.
“Wages and incomes are not rising in Northern Ireland and the housing market is now showing significant price falls. It is likely to experience the biggest drop in prices across the whole of the UK this year,” Ms Earley added.
Nationwide’s latest monthly survey shows house prices in the UK have fallen 4.4 per cent since this time last year, which is the biggest annual fall in house prices since December 1992, when prices were falling at an annual rate of 6.3 per cent.
The drop in house prices across every region of the UK in May marks the seventh consecutive period of monthly falls.
But because of the strength of house price growth in the UK up until last year, prices are still 5 per cent higher than two years ago and 10 per cent higher than three years ago.
The average price of a house in the UK now stands at £173,583.
According to Nationwide, global credit problems are the key reason for changing fortunes in the UK housing market.
Ms Earley said negative sentiment and weak economic news had also played a part in driving house prices down but it was primarily the fact that house buyers now had to pay more for their mortgages which was having the biggest impact on the market.
