The latest Northern Ireland Economic Outlook (NIEO) published this morning says average property prices are 53% below their 2007 peak, although the decline is slowing.
Nevertheless, average prices still fell by 5.9 per cent in the year to the end of March 2013, the report says.
Even if that decline bottoms out before the end of 2014, PwC says it could still take over a decade for property process to claw their way back to close to their 2007 level.
PwC Northern Ireland chief economist Dr Esmond Birnie, says the region must live with the legacy of falling house prices for a long time to come:
“An overspill from the Republic’s credit and property bubble, rampant speculative investment, and remarkably loose lending policies, drove Northern Ireland average property prices up by 250 per cent in the decade to September 2007.
“That was around twice the UK average increase of 145 per cent and a huge correction has driven prices back to pre-boom levels.”
While some types of property in popular areas of Northern Ireland are demonstrating real recovery, average property prices have some way to go before they are clearly on the turn, he said.
“That means real recovery in the property market will be long, difficult and wholly dependent on factors ranging from reduced household debt to more liberal lending policies.”
PwC says that the average house price to (average) earnings ratio has fallen to its lowest level in more than 10 years, at 3.04. In terms of this measure of affordability, the housing market has returned to the levels of the early 2000s.
In the wider economy, PwC says the province is showing signs of recovery but points out that it is the slowest recovery amongst the 12 UK regions.
Nonetheless, the firm says Invest NI enjoyed a remarkably successful year in 2012/13 in terms of attracting inward investment, delivering a 41 per cent increase in foreign direct investment (FDI),
“Now that the economy is showing the first signs of recovery we need to focus on attracting FDI, encouraging R&D and innovation and building internationally competitive businesses that can create sustainable, skilled employment.”
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