Peace propels property values in N. Ireland

Ashley Milne-Tyte Aug 2, 2007


Doug Krizner: We know the U.S. real estate market’s been in the doldrums, but in the U.K., home prices are still at record highs. One area with the biggest increase lately is Northern Ireland. And peace may be the reason.

Northern Ireland’s Catholic and Protestant parties signed a peace deal in 1998. This spring, a new government was successfully installed. And as Ashley Milne-Tyte reports from Belfast, it’s inspired an unprecedented housing boom.

Ashley Milne-Tyte It was last year that the housing market in Northern Ireland began to surge.

Even longtime Belfast realtor Beth Robinson was taken by surprise with the scale and strength of the boom.

Beth Robinson:We’re seeing increases like 30 and 40 percent over the last six, nine months, in house prices. And I would say the million pound house has become the two million pound house.

For the first time, residents on both sides of the border are buying houses in the north as an investment. But these buyers are competing against people who just want someone to live. There isn’t enough housing stock to go around.

Lawyer Peter King and his wife want to sell their town house in a popular Belfast suburb and get something bigger.

Peter King: The master bedroom, with the en-suite, and our bathroom . . .

The house has more than doubled in value since they bought it five years ago. Still, King says:

King: The trick is to find somewhere that has increased at a less proportionate level than this place has, and still buy it at a price that allows us to have a real profit from this house.

House prices in Northern Ireland are now equal to or higher than those in other parts of U.K, but wages here trail the average U.K. income by as much as 20 percent.

Graham Brownlow teaches economics at Queens University Belfast.

Graham Brownlow: The actual indebtedness of house owners in Northern Ireland at the same price is gonna be higher, given that they don’t have the same income but are paying the same amount of money.

He says things will get ugly if interest rates go up. Many new home owners have mortgages worth five to six times their salaries.

There’s been a flurry of speculation in the press recently that the so-called housing bubble is about to burst. Realtor Beth Robinson says these rumors have caused her a few problems.

Robinson: I’ve had two deals fall through this week on houses that I’d sold for 1.2 and 1.3 million.

Robinson says she’s confident she can sell the properties for the original price. Still, the sooner the better.

In Belfast, I’m Ashley Milne-Tyte for Marketplace.

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