Post by earl on May 2, 2008 16:37:34 GMT
The average price of a house in Northern Ireland will have dropped by £75,000 from its peak by the end of the year, an economist has said.
Richard Ramsey of the Ulster Bank predicted the average price of a house would fall to £175,000.
Average prices rose to £250,000 last summer but Mr Ramsey said the anticipated drop will take prices back to the levels of autumn 2006.
He gave his pessimistic assessment in the bank's latest quarterly report.
"In recent months, property prices have been aggressively reduced but some of these house price falls, in our view, have still not fed into the official statistics," he told the Irish News newspaper.
"We believe that the current Northern Ireland average house price is closer to £200,000 and we are anticipating it to fall by a further 12.5% to reach £175,000 by the end of 2008.
"While the market is hoping for a revival in the first time buyer market this year, the ongoing credit crunch is going to reduce the availability and increase the cost of credit for these borrowers."
However, he said the wider economy would not go into recession and would grow by about 1% this year.
His predictions come as the Nationwide said that house prices in the UK had recorded their first annual fall for 12 years.
Prices fell by 1.1% in April, the sixth monthly decline in a row, and were down 1% from the levels seen in April 2007, the building society said.
Nationwide said the price falls reflected a weakening market which had been hit by "poor affordability and tighter financial market conditions".
The figures come the day after the Bank of England's own data showed that new mortgage approvals had fallen to their lowest level since records began in 1990.
This was partly owing to the difficulty for first-time buyers in finding a mortgage deal without a significant deposit.
Richard Ramsey of the Ulster Bank predicted the average price of a house would fall to £175,000.
Average prices rose to £250,000 last summer but Mr Ramsey said the anticipated drop will take prices back to the levels of autumn 2006.
He gave his pessimistic assessment in the bank's latest quarterly report.
"In recent months, property prices have been aggressively reduced but some of these house price falls, in our view, have still not fed into the official statistics," he told the Irish News newspaper.
"We believe that the current Northern Ireland average house price is closer to £200,000 and we are anticipating it to fall by a further 12.5% to reach £175,000 by the end of 2008.
"While the market is hoping for a revival in the first time buyer market this year, the ongoing credit crunch is going to reduce the availability and increase the cost of credit for these borrowers."
However, he said the wider economy would not go into recession and would grow by about 1% this year.
His predictions come as the Nationwide said that house prices in the UK had recorded their first annual fall for 12 years.
Prices fell by 1.1% in April, the sixth monthly decline in a row, and were down 1% from the levels seen in April 2007, the building society said.
Nationwide said the price falls reflected a weakening market which had been hit by "poor affordability and tighter financial market conditions".
The figures come the day after the Bank of England's own data showed that new mortgage approvals had fallen to their lowest level since records began in 1990.
This was partly owing to the difficulty for first-time buyers in finding a mortgage deal without a significant deposit.