Foreign Perspectives

As you’ll know if you have been following our little saga, we may be living in the south of France but we actually watch BBC Northern Ireland for the news & weather.

So, you would think that we would be aware of a boom in house prices in Northern Ireland, wouldn’t you? We certainly did but in practice it’s one of the things that you need to be living in the country to really notice. We knew that the house prices were going up but just assumed that it was the same drifting up that there has always been whereas in fact it’s been quite a boom lately which we only knew about when a friend from back home mentioned it in passing in an e-mail.

For example, our own house was valued at £117,500 in February 2005 and £130,000 in September 2006 which is a reasonable enough rise in the price. However, right now an identical house has just been sold for £180,000 which is a pretty staggering rise in just a few months. It doesn’t seem to be an isolated jump either as my parents house has gone from around £130,000 at the start of 2005 to £250,000 now.

Unfortunately for anyone wanting to buy their first house, the salaries locally don’t seem to have experienced anything like the increase to warrant such high prices and as a result the rental market seems to be growing quickly too. For example, we had new tenants in our house in under three weeks when ordinarily it would take a few months to find new tenants. What’s also happening is that the earnings multiples on mortgages are moving up with five times income the norm vs just three times only a few years ago.

Who is driving this rise though? Well, as I’m sure you remember Northern Ireland had the “troubles” for most of the last 30 years. What happened over that time is that whenever there was an uptick in violence then the number of people leaving Northern Ireland went up correspondingly. The overall effect is that there are a considerable number of people who consider Northern Ireland as home but who live elsewhere. A side effect of that was that house prices in Northern Ireland were unrealistically low in comparison to elsewhere in the UK yet in the 1960s (before the troubles) prices in Belfast were comparable to those in London.

Now that peace seems more solidly based, those people are starting to come back and they’re driving the house prices through the roof right across the province. In effect, the prices are jumping to catch up with where they would have been had the troubles not happened.

Is there any more of a rise to come though? It would appear so in that the prices still haven’t caught up with those of properties in outer London which they were comparable with in the 1960s. That would imply a price for my parents house of over £500,000 ie about double it’s current price.