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The growth and performanceof the Northern Ireland housingmarketA.S. Adair a , W.S. McGreal a & S. McKay aa Department of Surveying , University of Ulster atJordanstown , Shore Road, Newtownabbey, NorthernIreland , BT37 0QBPublished online: 27 Apr 2007.

To cite this article: A.S. Adair , W.S. McGreal & S. McKay (1989) The growth andperformance of the Northern Ireland housing market, Land Development Studies, 6:3,217-232, DOI: 10.1080/02640828908723988

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Land Development Studies, 1989, 6, 217-232

The growth and performance of the NorthernIreland housing marketA.S. ADAIR, W.S. McGREAL, S. McKAYDepartment of Surveying, University of Ulster at Jordanstown, Shore Road, Newtownabbey, Northern Ireland,BT37 OQB

Received February 1989

Summary

The complexity of the housing process is discussed in realtion to home ownership levels, the rate of newresidential development and the performance of the private market in Northern Ireland where publicsector led initiatives have been instrumental in boosting owner occupation levels. The availability of aco-ownership route to house purchase is one key aspect of housing policy in the province. This has hadbeneficial effects most notably through the encouragement of a high level of new residentialdevelopment, however there are also negative impacts of over saturation and market distortion.

Keywords: Northern Ireland, housing market, home ownership, co-ownership purchase, residentialdevelopment.

1. Introduction

The dynamics of the housing process provide the context for this paper which is concernedwith the private housing market in Northern Ireland, and its constituent market areas(Fig. 1), during the period 1980-8. The research is based upon an ESRC funded project intothe growth of home ownership, new residential development and widening patterns of accessinto the private housing market. Issues developed by the paper include the growth of owneroccupation, demand factors, the supply of housing units by the transfer of tenurial rights inthe existing stock and the development of new property, and the interaction ofdemand-supply through an analysis of the price structure of the market.

2. Historical perspective

The period 1919-39 is marked by a considerable divergence in housing policy betweenNorthern Ireland and Great Britain (Singleton, 1984). In England and Wales there was ahousing boom stimulated by local authorities taking advantage of Exchequer subsidies topromote building and by the 1924 Housing Act which established the provision of adequatehousing as a social service responsibility of government. Poor housing conditions inNorthern Ireland were as great a problem as in Great Britain but the province did not

© 1989 Land Development Studies Education Trust

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218 Adair et al.

1 BELFAST2 NORTH DOWN3 LISBURN4 MID & SOUTH DOWN5 CRAIGAVON/ARMAGH6 MID ULSTER7 ENNISKILLEN/FERMANAGH/

S.TYRONE8 LONOONDERRY/STRABANE9 COLERAINE/LIMAVADY/

NORTH COAST10 ANTRIM/BALLYMENA11 EAST ANTRIM

Fig. 1. NIPMAP market areas

experience a housing boom (Murie et al, 1971), rather the Northern Ireland governmentoperated a policy of non-intervention in the housing market and relied almost exclusively onthe private sector to identify and meet housing needs. The outcome of this policy was adeclining and deteriorating housing stock which created a legacy of housing unfitness anddisrepair, a policy described as 'one of failure' (Lawrence, 1965).

The magnitude of the housing problem was highlighted by a survey in 1943 whichestimated that at least 229 500 of the private housing stock of 323 000 dwellings (71%)required repair and that an estimated 200 000 dwellings were required to eliminateovercrowding and slums. This deprivation produced a change in post-war housing policywith increased subsidies for house building and greater provision of public housing. Whilethe provision of housing per capita was on a par with the rest of the UK it was unable toovercome the legacy of neglect especially in Belfast where the large amount of rent controlledproperty posed an acute unfitness problem. The seriousness of the housing question togetherwith pressures for political change and reform led to the government centralising housingprovision in 1971 under the Northern Ireland Housing Executive (NIHE).

The NIHE took over the direct responsibilty for one third of the province's total housingstock and began a comprehensive programme of renewal of unfit houses and improvement ofdwellings in poor repair. The enormity of the task is shown by a comparison of unfitnessstatistics: the House Condition Survey in England and Wales in 1971 showed a level ofunfitness of 7.3%, in Northern Ireland and comparable 1974 survey showed an unfitnesslevel almost three times higher viz, 19%.

Throughout the 1970s emphasis remained on the public sector as the main provider ofhousing - of the 100 000 new houses provided two-thirds were in the public sector. Theimproving quality of the province's housing stock saw unfitness levels reduced to 14% by theend of the decade, yet Northern Ireland still continued to lag behind the rest of the UK (acomparable survey for England in 1976 showed an unfitness rate of 4.6%). By the end of the

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The Northern Ireland housing market 219

1970s finance had become the main constraint on public sector output although NorthernIreland was looked upon more favourably than Great Britain in terms of housingexpenditure in the early 1980s.

3. The growth of private sector housing in Northern Ireland

Housing tenure trends for Northern Ireland in the 1980s follow the national picture ofincreasing levels of owner occupation, a declining rented sector and an embryonic role for thehousing associations (Table 1). The encouragement and growth given to owner occupationat the expense of the public rented sector is the direct result of government policy. This hasbeen achieved by three mechanisms, viz, the sale of public rented housing to sitting tenants,the widening access to the private market through a co-ownership route to house purchaseand the encouragement of new residential development by the private sector. The outcome ofthis policy has resulted in an increase in home ownership of c. 55 000 households over theperiod 1980-7 (DOE NI Housing Statistics, 1988). Whilst home-ownership increasedsteadily, there are two main periods of growth, viz, 1981-2 and 1984-5. In contrast publicsector provision peaked in 1980 with subsequent decline (Fig. 2).

Table 1. Tenure trends in UK, 1980-6 (% change)

UK country % owner-occupied % public rented % private rented % HA

EnglandN. IrelandScotlandWales

65.0% ( + 6.8%)60.4% ( + 7.7%)42.1% ( + 6.0%)67.5% ( + 8.0%)

24.4% (-4.4%)34.4»/o (-4.5%)49.4% (-4.4%)22.8% (-6.1%)

8.0% (-2.4%)4.1% (-4.0%)6.3% (-1.9%)8.0% (-1.4%)

2.6%1.1%2.2%1.7%

60

50

40 -

3 0 •

20 -

10 -

-O OWNER OCCUPIED

PUBLIC RENTED

PRIVATE RENTEDHOUSING ASSOCIATION

1980 1981 1982 1983 1984 1985 1986 1987Fig. 2. Housing tenure as % of total housing stock (NI)

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220 Adair et al.

3.1 Sale of public rented housing

From its inception the NIHE supported in principle the sale of its existing stock. In 1979 anon-statutory Voluntary Sales Scheme (VSS) was initiated allowing tenants to buy theirhouses. Although Right to Buy (RTB) legislation was introduced in Great Britain in 1980 theNIHE continued to apply the VSS scheme. Despite RTB legislation being enacted in theprovince via the Housing Order (NI) 1983 no dwellings have been sold under the scheme.The reason being that VSS incorporates all of the benefits, discounts and repaymentprocedures of RTB but is more efficient and simpler to administer. VSS by-passes thetechnicality of the tenant serving a notice on the housing authority (as under RTB). Inaddition under VSS the NIHE can dispose of property not held in fee simple, a facility whichis not permitted under the RTB scheme. Set within the context of a reduced public sectorprovision, the sale of NIHE property under VSS has been the single most important factor inincreasing home ownership in the province. The total number of sales under the scheme isover 35 000 or c. 62% of the increase in home ownership. Sales through the scheme peaked in1981 (Fig. 3) coinciding with the first surge in the rate of home ownership, and weremaintained at high though declining levels over the period 1981-5. Since 1985 the volume ofsales has dropped considerably and the 1988 Northern Ireland Public Expenditure WhitePaper suggests that sales under VSS will continue to decline reaching c. 2000 in 1990-1,though recent (1989) initiatives taken by the NIHE may in the short-term boost house sales.

6000 -

5000 •

4000

3000 ^

NIHE SALES2000

1000 - NICHA TRANSACTIONS

1981 1982 1983 1984 1985 1986 1987

Fig. 3. NIHE sales and NICHA transactions: 1981-7

The high sales volume under VSS can be attributed to the generous discounts to sittingtenants and to the rapid rise in rents which reduced the differential between the servicing of abuilding society mortgage and the paying of a rent to the housing authority. The success ofVSS can be measured by the appreciably greater rate of uptake of stock for purchase inNorthern Ireland relative to Great Britain; in 1986 15% of NIHE stock had been committedfor sale whereas the corresponding figure in Great Britain was 11%.

The distribution of NIHE sales within the province mirrors the existing pattern of owneroccupation by geographical area. The highest number of VSS sales occurred in the areas with

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The Northern Ireland housing market 221

the highest rates of owner occupation. For example North Down (Fig. 1), an affluentcommuter area close to Belfast with 74.2% level of home ownership, had the highestpopulation of sales (SE region - 23%) whereas Belfast and Londonderry (Derry) with lowerlevels of home ownership (55.1 % and 47.2% respectively) had a smaller proportion of sales;Belfast 12% and North West region 11%. Disaggregation of VSS sales by property typeshows houses to be the most popular purchase, while comprising 67% of the stock they takeup 85% of dwellings sold. Sales of maisonettes, flats and split-level properties are unpopularcomprising only 1% of all sales yet accounting for 19% of existing stock. The majority ofsales (75%) are of dwellings constructed between 1945 and 1971 whereas only 12% of salesare post-1971 property. The low proportion of newer property arises from higher marketvalues and historic cost constraints.

The profile of NIHE purchasers indicates the typical buyer to be a skilled manual workerin middle age with a grown-up family, a profile broadly comparable to council house buyersin Great Britain. The average age of purchasers is 50, in contrast to an average age of 35 forpurchasers in the private sector. The NIHE House Sales Report (1986) also reveals that thehoushold type purchasing through VSS differs significantly from those leaving the publicsector and buying privately, for example about half of such purchasers in the private marketare small family or small adult households compared to just 21% of sitting tenantpurchasers.

3.2 Co-ownership purchase

The Northern Ireland Co-ownership Housing Association (NICHA) was established in 1978on the initiative of the Department of Environment (NI) in order to assist, by means of anequity sharing arrangement, low-income first time buyers to acquire family accommodation.Co-ownership is essentially a form of tenure in between purchase and renting and is gearedtowards those people unable to afford the full costs of home ownership but would be willingto pay more than public sector rents in return for owning a stake in the equity of theirdwelling. The initial equity purchase, for which building society finance is available, must bein the range of 50-75% of purchase price. Participants in the scheme pay a rental element tothe Association on the rest of the equity. Hence financial commitment includes partmortgage and part rental elements, though occupiers can staircase through to a full equityholding by one or more subsequent purchases.

A number of co-ownership schemes operate in Great Britain, e.g. DIYSO, but none hasbeen as successful as NICHA, which has played a distinctive role in boosting homeownership in the province. Whilst a public sector initiative the scheme has been stronglysupported by private sector, principally building society, lending, the current annual ratio isc. 40:60 (public: private sector) input. Price thresholds govern the eligible property andcurrent NICHA regulations permit the purchase of the following categories of housing:

(i) new properties and properties up to 5 years old throughout Northern Ireland, providedthat the valuation does not exceed £30 700 (NBC 10 year guarantee applies).

(ii) existing properies throughout Northern Ireland over 5 years old provided that thevaluation does not exceed £26 800 (prior to September 1987 this category applied only toBelfast).

The pricing structure is subject to annual review to ensure parity with increases in propertycosts. However price levels are so pitched to reflect the purchasing power and aspirations of

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222 Adair et al.

first-time buyers in the open market. Calculation of the figures are on the basis of the 65thpercentile of open-market sales to first-time buyers. In essence the thresholds permitpurchase into either the semi-detached or terraced sectors and possibly apartments, butgenerally excludes purchase in the detached sectors unless sale price is within the abovelimits. An examination of movements in price thresholds and their relationships to the priceof new and existing property has been discussed elsewhere in more detail by the authors(Adair et al, 1988a).

Since 1980, 8077 households have entered owner occupation through the co-ownershipscheme, the peak in co-ownership sales (Fig. 3) coinciding with the second surge in homeownership levels (1984-85), thereafter declining at a progressive rate. Profesional opinionsuggests that co-ownership was intially a major boost to the property market, by stimulatingdemand, particularly for new housing in the semi-detached sectors which were intensivelytargeted by the developers (up to 70% of output) who built to a particular design andstandard within the NICHA thresholds (Table 2). Certainly parallel trends exist between thegrowth of co-ownership activity (Fig. 3) and the rate of new build in the private sector(Fig. 4).

Table 2. Co-ownership completions by housetype (1978-87)

House type No

Detached property 657 8.0Semi-detached property 6479 79.2Terraced property 732 8.9Apartments 325 3.9

10000 - TOTAL ALL AGENCIES

PRIVATE

PUBLIC

1980 1981 1982 1983 1984 1985 1986 1987

Fig. 4. New build housing starts: 1980-7

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The Northern Ireland housing market 223

In terms of co-ownership purchase by market area (Fig. 1), North Down with its alreadyhigh level of owner-occupation had the largest proportion of co-ownership transactions(11.7%). However market areas, with traditionally low rates of owner occupation, haveexperienced a considerable increase in home-ownership levels over the past 10 years due to ahigh proportion of co-ownership transactions; for example in Belfast 10.1% of housepurchase transactions were through co-ownership, in Craigavon 9.2% and for Derry 8.2%.Co-ownership has clearly played a significant role in increasing owner-occupationthroughout Northern Ireland and across a range of market areas within the province.

The socio-enconomic characteristics of co-ownership purchasers differ significantly tothat of NIHE tenant purchases. The modal age group is 20-29 in contrast to the middle ageprofile of NIHE purchasers. In terms of family size 68% of purchasers have no children and52.6% of entrants are single. The occupational status of the head of household is generallyskilled working class or lower middle class. Furthermore a survey of entrants into the newbuild market undertaken by the authors revealed that co-ownership purchasers are moremarginal to home ownership than conventional purchasers. Diagnostic statistics being thehigh dependency (in 66% of cases) of co-ownership purchasers upon 100% lending and thelack of any savings prior to purchase in 27% of cases. The survey results also indicate that co-ownership brings people into the private sector at an earlier stage; 49% of those in co-ownership would not have entered the private housing market had co-ownership not beenavailable, although 73% of these did consider that they would have aspired to owner-occupation within 5 years.

3.3 New residential development

The level of new build activity in the private sector in Northern Ireland has growndramatically in contrast to the sharp decline in public sector provision (Fig. 4). In 1981private sector new build accounted for 46% of housing starts, by 1987 this had increased to76%. The diminishing role of the public sector is compounded by the fact that the number ofsales to sitting tenants has outstripped the supply of newly built houses (Table 3). Since 1983the level of new provision has dropped dramatically. Whilst NIHE starts reached a recordlow in 1987 the private sector achieved a record high of 7418 starts.

Table 3. NIHE sales and starts

Year

1981198219831984198519861987

NIHE sales (1)

6471608153675665433036602804

NIHE starts (2)

2509324743573074235219201595

The Northern Ireland house building trend reflects the national picture of increasing levelsof new development (Table 4). However in the province the volume of new build in theprivate sector has grown at a rate significantly above that experienced elsewhere in Britain,viz 267% increase in Northern Ireland over the period 1981-1987 compared to a national

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224 Adair et al.

increase of 61 %. In the North-East of England, a region often used as a comparative base forNorthern Ireland, the number of new housing starts in 1987 was c. 4100, again significantlybelow the level of private sector development in Northern Ireland. Building society lendingconfirms the higher percentage of loans being advanced on new build property in NorthernIreland, 27.7% of advances in the province in 1986 were for newly developed propertycompared to a national figure of 10% (Building Societies Association, 1988). Seemingly ahigh percentage of this lending is geared towards the new build co-ownership sector, indeed itis freely admitted by building society mangers and surveyors, with the benefit of hindsight,that there has been an unhealthy over targeting in this market sector.

Table 4. Private housing starts in Great Britain andNorthern Ireland

Year

19801981198219831984198519861987

Great Britain

98 001116 818140 647169 821154 222163 090175 086191518

Northern Ireland

33382776448768927314711971447418

Data on house building activity in the province is obtained from two main sources, DOE(NI) and the National House Building Council (NHBC) for Northern Ireland. Each datasource has its own peculiar problems, viz DOE data does not provide a breakdown of housestarts or completions by house type, whilst the figures available from the NHBC on housetype only cover the period to the end of 1985 and furthermore do not include statistics forbuilding activity by non-registered builders. Consequently disaggregation of the market isdifficult, nevertheless a number of linkages can be made between the data that are availableon housing starts and the significant role of co-ownership purchase.

Table 5. NHBC registrations by house type 1982-5

House type

TerraceSemi-detached houseDetached houseSemi-detached bungalowDetached bungalowApartment/flatTotal registered

1982No

2541211473790524181

3433

%

8351423155

100

1983No

3042192

6721305932333

5739

%

5381223166

100

1984No .

3452198

81411141061514

6046

%

6361318188

100

1985No

27620151061904

1149394

5799

%

5351816206

100

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TTie Northern Ireland housing market 225

The key points to arise here are:

(i) The sharp increase in NHBC registrations of semi-detached property in 1983 which hasbeen maintained at a high level for subsequent years (Table 5); co-ownership transactionsshow a corresponding rise over the period (Fig. 3) and indeed 80.2% of all co-ownershiptransactions in 1983 were for semi-detached property.

(ii) The very high percentage of NHBC completions falling into the low cost housingbracket (this NHBC definition closely follows NICHA limits and changes), particularly in1982 and 1983 (Table 6) when co-ownership activity was on a rising limb (Fig. 3). Thesmaller percentage of low-cost houses in 1985 reflects not so much a reduction in the buildingof semi-detached property for co-ownership purchase but an increase in the levels ofdevelopment in the detached sectors.

(iii) The relative decline of the new build terraced market whilst the apartment sector hasbecome a stronger feature of new development activity, indeed by 1985 apartmentsconstituted c. 6% of all co-ownership transactions from a zero base in 1982.

Table 6. NHBC low cost house completions, 1982-5

1982198319841985

NHBC totalcompleted

2765430851025941

Total lowcost houses

2625408338933774

Low cost%

94.9%94.7%76.3%63.5%

The extent and impact of new development is variable on a sub-regional basis across theprovince, in some market areas development activity has peaked and is tailing-off whilst inother market areas the rate of new development is increasing. Analysis of the propertymarket in the province, by the authors, under the auspices of the Northern Ireland PropertyMarket Analysis Project (NIPMAP) has identified a number of market areas e.g., Derry,Enniskillen, Craigavon, Mid-Ulster, East-Antrim, Lisburn (Fig. 1) where newly builtproperty has accounted for c. 40% of all residential sales. Professional sources in these areasconfirm the close linkage between high levels of new build and co-ownership sales. In somedistrict towns concern has been expressed by estate agents that over-supply of newlydeveloped property in the co-ownership-semi-detached sector is now having a negativeimpact due to market saturation. For example in Armagh the effect of a high rate ofdevelopment in 1983-84 is still a major influence in the local market.

The high level of residential development has taken place in a planning framework inwhich land availability is not an issue of concern, indeed generous land zoning policiescoupled with housing initiatives such as co-ownership have stimulated developers to buildahead of the market. This practice is, however, risky given that the province's housing marketis finite and lacks an element of dynamic internal growth. Indeed examples exist, wheredevelopers have falsely continued to target (in 1987-88) what was a declining co-ownershipsector; the outcome being market over-supply, e.g., Derry.

The one exception to this pattern of new development activity is Belfast where the rate ofnew build activity has declined since 1985 not due to a lack of demand but rather from a

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226 Adair et al.

shortage of suitable building land. In this respect Belfast, due to a planning policy ofcontainment, is experiencing development pressures akin to other UK cities where the landavailability debate has been more focused (Blincoe, 1987).

4. Property market performance

The observations presented in this section are based upon two sources of evidence namely thequantitative analysis of house price information (NIPMAP data-base) and the qualitativeand judgemental opinion of estate agents.

Generally the performance of the Northern Ireland housing market over the period1985-8 has been one of slow growth in terms of price movement. The increase in value for the'whole market' as measured by a weighted property index is 15.40 points which largelyparallels movement in the retail price index (Fig. 5). The period from the second quarter of1986 through to the end of 1987, in particular, typifies the slow market during which theproperty index increased by a modest 2.52 points. Indeed throughout 1987 the propertyindex fluctuated in a narrow band of little over 1 % point. The 1988 figures (first-half figures)are indicative of a 'recovery' in the Northern Ireland market reflecting in part the nationaltrend of high house price inflation throughout the year. However whether this upturn in pricestructure will be maintained in light of changing economic outlook and, in particular, higherinterest rates is problematical given the 4th quarter decline.

84/4 85/1 85/2 85/3 85/4 86/1 86/2 86/3 86/4 87/1 87/2 87/3 87/4 88/1 88/2 88/3 88/4

Fig. 5. NIPMAP house price change and RPI

The NIPMAP evidence is supported by data from the Halifax Building Society whichlikewise shows a picture of slow growth in the price structure of the Northern Ireland market.Indeed the pattern of house price movement between the two surveys is remarkably similar.Furthermore the building society evidence highlights the widening gulf in residentialproperty values between Great Britain and Northern Ireland with the province being placedat the foot of the house price league. Yet in 1985 Northern Ireland was in eighth position inthe table of economic regions with respect to house price levels (Adair and McGreal, 1986). It

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The Northern Ireland housing market 227

thus appears that the poor performance of the Northern Ireland market over the period1986-7 is anomalous to what was happening elsewhere in the UK, not just in the South-East,but also in other 'depressed' economic regions, viz Northern England, Scotland. Rather thanbeing symptomatic of the disparity of income and wealth within the UK or the province'spolitical problems, the authors consider the lack of price movement to be reflective of issuesmore specific to the Northern Ireland market, in particular an imbalance between supply anddemand created by the high input of newly developed property.

Disaggregation of the Northern Ireland market by type (Table 7) highlights the high andincreasing market share taken by semi-detached houses clearly boosted by the pace of newbuild activity and the preponderance of co-ownership transactions within this sector. Incontrast terraces, are maintaining their market share due to the high concentration of olderproperty in Belfast and Londonderry city. The strength of the detached bungalow sector is acharacteristic distinctive of the Northern Ireland market and seemingly influenced by thelower price of development land in the province.

Table 7. Market share by property type

Property type

TerracesSemi-detached housesDetached housesSemi-detached bungalowsDetached bungalowsApartments

Annual1985

21%24%14%14%25%2%

market share1986

22%26%14%12%23%3%

1987

22%26%13%12%24%

3%

1988

23%27%14%11%23%2%

The level of development activity is supported by the highly significant share of openmarket transactions taken by newly built property (Table 8). Although there is someindication of a slowing down of demand for new build property during 1988, the proportionof the Northern Ireland market taken by this property type is appreciably greater than theGreat Britain market. For example statistics available from the Nationwide Anglia BuildingSociety for 1986 suggest that 9% of the Great Britain housing market is taken by new buildproperty, this contrasts sharply with the 29% figure for Northern Ireland. The most recentevidence from Nationwide Anglia suggests that 8% of the Great Britain market is taken bynew build property. While the corresponding figure for Northern Ireland has declined to23%, the province's housing market still has about three times more new build than GreatBritain. The multiplier has remained relatively constant. This unprecedently high level ofnew build activity (i.e., supply side input) is arguably one of the main influences in the overallperformance of the private housing market in the province.

Table 8. Market

Age of property

ExistingNew build

share: existing property vs. new build

Annual market share1985 1986

69%31%

71%29%

1987

72%28%

1988

77%23%

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228 Adair et al.

Analysis of the new build sector of the property market (1985-8), using NIPMAPevidence, shows its evolving and changing nature (Table 9). In the semi-detached marketbuilding rates are reduced mainly due to a lower input in the bungalow sector, whilst the levelof development in detached property, both houses and bungalows, has strengthened. Indeedthis market evidence extends the pattern coming through from NHBC registrations(Table 5). These statistics also support the opinion expressed by many developers that 1988has seen a distinctive movement towards the mid-upper market sector and away from thestarter home or co-ownership level. Likewise estate agents have identified the middle marketas the area of most rapid growth in demand, indeed several are of the opinion that overdevelopment at the lower end of the market has led to a middle-market gap.

Table 9. Market share of new build sector by property type

Property type

TerracesSemi-detached housesDetached housesSemi-detached bungalowsDetached bungalowsApartments

Percentage1985

3%23%10%29%29%

6%

of new1986

4%24%11%24%28%

9%

build market1987

5%25%10%20%31%9%

1988

5%23%15%18%32%

7%

Performance analysis (Table 10) is indicative of slow growth in price levels across allproperty sectors, notably in the semi-detached market. This price behaviour is a function ofthe co-ownership process which encourages building at or below a threshold price level.Furthermore the rapid development into this market sector has resulted in disequilibrium inthe housing market. A high or over supply of semi-detached property has been identified byestate agents and valuers in market areas right across the province viz, Derry, Coleraine,Craigavon, Antrim, Ballymena, Bangor (Fig. 1). Elsewhere in the market the greatestincrease in price levels are recorded in the terraced and detached house sectors. However the17-20% movement in price levels in these sectors is extremely modest in comparison to theannual, or even quarterly, increases recorded in other UK regions over this time period.

Table 10. Price means and percentage increase by property type 1985-8

Property type

TerraceSemi-detached houseDetached houseSemi-detached bungalowDetached bungalowApartment

1985£

16 48325 2264194524 20035 21325 652

1986£

17 55025 88646 33625 34936 99427 156

1987£

18 12326 57547 17826 05638 60628 775

1988£

19 39227 60450 42227 07440 10133 270

1985-6%

6.472.62

10.474.755.067.27

1986-7%

3.262.661.822.804.364.58

1987-8%

7.003.876.88

3.913.8715.62

(1985-8%

(17.65)(9.43)

(20.21)(11.88)(13.88)(29.70)

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The Northern Ireland housing market 229

The apartment sector in the province is a small specialized market located in Belfast and ismainly composed of newly built property. The relatively healthy increase in the price level ofapartments (29%) reflects the specific demand, quality and location of these new apartmentdevelopments.

Table 11. Price means and percentage increases by age of property 1985-8

Age ofproperty

ExistingNew-build

Price means (£)1985 1986

27 67528 939

28 80631008

1987

29 48132 173

1988

30 75735 210

% Increases1985-6 1986-7

4.097.15

2.343.76

1987-8

4.339.44

(1985-8)

(11.14)(21.67)

A further characteristic of the Northern Ireland residential market highlighted by thisanalysis is the widening gap in the price structure of new and existing property (Table 11).Indeed the differential in the rate of price increase over the period 1985-8 is c. 10.5% whichset in the context of the generally slow market is appreciable. This issue is again focused bythe performance of the semi-detached sector (Table 12) in which the price structure ofexisting property declined in real terms (and in absolute value for semi-detached bungalows)over the period 1986-7 (Adair et al, 1988b). The inference is supported by the opinions ofvaluers in both the public and private sectors that the existing semi-detached market isdepressed, indeed examples are freely quoted of re-sale values of property considerably belowinitial purchase price. In contrast newly developed property has continued to increase inmarket price level, seemingly responding to the annual rise in co-ownership thresholds,irrespective or the performance of the existing market. In essence this appears to be anotherconsequence of the introduction of an artificial mechanism (co-ownership purchase) into themarket.

Table 12. Rates of price movement in the semi-detachedsector 1986-7

Property age classificationExisting New build

Property type % change % change

Semi-detached house +1.90% +4.75%Semi-detached bungalow -1 .22% +6.10%

Market area analysis at the sub-regional level (Table 13) in most cases supports thehypothesis developed at the micro level that newly built property has performed better thanexisiting property and that, by inference, the lack of movement in the latter is thefundamental reason for the absence of growth in the price structure of the Northern Irelandhousing market. A prime example of this is Craigavon where the price structure of theexisting semi-detached sector has clearly weakened yet newly developed property hasstrengthened in value; of further interest here is the observation by the Halifax BuildingSociety that Craigavon has the lowest price structure for semi-detached houses in the UK. InBelfast the semi-detached sector, almost exclusively houses, indicates the high rates of price

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230 Adair et al.

movement that can exist in the urban situation where there are pressures in the market.Under this scenario the movement in co-ownership thresholds and the price ceiling is, at best,just adequate to keep pace with the upward movement of price levels in the new build sector,whereas for the other market areas the threshold is clearly above the price structure of thelocal market and promotes imbalances. Local market areas in the Belfast commuter zone vizNorth Down, Lisburn, East Antrim again support the trend of a weak existing marketrelative to the new build sector. The Derry-Strabane market is traditionally one of the lowestpriced housing areas in the province and while the performance in the semi-detachedbungalow sector reflects the wider market trends, the rapid rise in semi-detached housesstems from a very low price structure in 1986.

Table 13. Rates of price movement in semi-detached sector

Market area

BelfastNorth DownLisburnEast AntrimAntrim/BallymenaColeraine/LimavadyDerry/StrabaneMid UlsterEnniskillenCraigavonMid & South DownNorthern Ireland

Semi-detached housesExisting

+ 0.84%-1.22%+4.46%+ 2.79%-0.75%-0.41%

+ 14.65%+ 6.55%

*-6.18%+ 3.33%-1.90%

New

+10.52%+ 2.57%+ 3.37%+ 3.91%+0.34%+ 5.34%+ 4.50%

+ 10.15%+0.22%+ 4.54%-0.04%+4.75%

1986-7, by market area

Semi-detachedExisting*

-0.89%-4.96%-4.68%*+4.32%-4.58%**-7.56%-2.23%-1.22%

bungalowsNew

*

*+ 3.97%+4.53%+ 5.59%+ 1.79%+ 6.35%+ 5.41%+ 6.60%+ 9.14%+ 0.94%+ 6.60%

insufficient sample size

5. Discussion

Private sector housing in Northern Ireland has many contrasts with the wider UK market, anumber of which have been the subject of discussion in this paper. A key distinguishingfeature of the housing market within the province has been the availability of a co-ownershiproute to house purchase. This initiative has achieved a notable level of success in its desiredobjective, namely the widening of home-ownership to socio-economic or income groupswhich have traditionally been excluded from, or are marginal to, owner-occupation.

However from an economic and valuation perspective co-ownership is perceived as anartificial mechanism which has produced distortions withiri the market. The attractiveness ofco-ownership to the first-time buyer and its targeting towards the new build sector,encouraged by higher price thresholds, was sufficient to stimulate the house buildingindustry to channel the greater part of its output to a particular market niche namely semi-detached property. This process was fostered by wider government policy concerning home-ownership, and by planning policy and practice within the province that greatly facilitateddevelopment. Reacting to policy, and the decline in public sector provision, the building

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The Northern Ireland housing market 231

industry continued to target aggressively the semi-detached market, even after co-ownershippeaked in the mid 1980s, the outcome being new build activity at record levels in the privatesector (1987) with resultant dis-equilibrium in the operation and performance of the housingmarket, the consequence of which has been a very low rate of house price inflation inNorthern Ireland, c. 15.4% over the period 1985-8.

The Northern Ireland experience clearly highlights the supply-demand economics of thehousing process in a market characterized by over-supply. Given these conditions owner-occupiers have failed to witness a growth in the value of their investment on the scale whichtheir counterparts in all other UK regions have enjoyed. Indeed the differential in the pricestructure of property between Northern Ireland and Great Britain is now so great that this isimpinging upon the migration process. Yet the impact is not entirely negative. The low-costproperty market within the province means that good quality housing is available ataffordable prices, this is particularly significant at a time of high mortgage interestrepayments. Secondly owner occupation levels have increased primarily due to initiativessuch as NIHE sitting-tenant sales and co-ownership purchase, the latter providing a low-costalternative which has failed to be implemented or adequately exploited elsewhere in the UK.Given the price structure of property in many British cities and the difficulties of first-timebuyers in entering those markets the time may now be opportune to reconsider shared-ownership schemes and low cost initiatives similar to the Northern Ireland model.

Acknowledgement

The support of the Economic and Social Research Council (ESRC) is gratefullyacknowledged. The work was funded by ESRC award number D00232346.

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