House prices in the opening quarter of 2025 (the most recent available data) were up 9.5% compared to the previous year, with the number of sales also up over the year and listings reported to have increased from the end of 2024.
In contrast with the UK as a whole, over the past few years the housing market in Northern Ireland has avoided any year-on-year price decline. In fact, since the final quarter of 2013, yearly house price growth in Northern Ireland has remained positive, with a long-term average growth rate of around six percent.
Underpinning the continued rise in house prices are developments that can be combined into two simple but dominating factors – a lack of sufficient supply of housing and continued resilience in demand from homebuyers. In terms of housing supply, applications for planning permission have continued along a downward trend to the lowest level since the figures were officially reported in 2002. In the year to March 2025, total applications received fell below 10,000, down 3% from the previous year, over a fifth lower than in the year to March 2020 and marking around a 70% reduction in applications when compared to its peak twenty years ago.
While the total number of completed dwellings picked up in 2024 from its series low level the previous year, it remained below its long-term average and at just over 6,000 completions. The latest data suggests an increase in homebuilding of at least 10% per year will be needed to meet the Housing Supply Strategy aim of 100,000 new homes over the next 15 years.
A key problem to increasing supply, despite the incentive of continued rising prices, is that homebuilding relies on more than just demand for housing – it needs sufficient infrastructure capability. Inadequate wastewater infrastructure across Northern Ireland has been adding delays for developments and increasing the complexity of rural homebuilding.
Two reports have been published earlier this year on the wastewater issue: a joint publication from NI Chamber, the Construction Employers Federation and the Northern Ireland Federation of Housing Associations, and a report published by the NI Fiscal Council.
Both highlight how construction activity, including homebuilding, is being negatively impacted by the lack of adequate wastewater infrastructure. For wider context, last summer NI Water confirmed that more than half of the 37,000 properties waiting for connection to the sewage network could not be connected.
The reports outline the need for large-scale investment, without which there will not only be further delays in homebuilding, but also wider economic consequences through reduced investment, economic growth limitations and environmental concerns. Solutions to this issue are at best likely to take several years to materialise.
And supply issues are not limited to the private sector. As of March 2025, there were close to 50,000 people on the social housing waiting list in Northern Ireland, adding further strain to the already pressured rental and housing markets.
Turning to demand for housing, the resilience of homebuying in Northern Ireland has defied expectations given recent economic challenges. In addition, increasing population levels, a societal trend towards more people living on their own and in general people living for longer has increased the overall demand for housing in Northern Ireland.
In the first quarter of this year, annual price increases were reported across all housing types, overall numbers of first-time buyer mortgages increased and houses sold more quickly than the long-term average for quarter one. Looking forward, easing economic challenges should provide conditions for continued resilience in demand.
A slowdown in the rate of inflation over recent years has reduced some of the pressure being felt on household finances and has paved the way for the Bank of England’s Monetary Policy Committee to vote for continued, gradual downward movements in Bank Rate.
While we have seen some expected and modest upward moves to inflation in recent months, further cuts to Bank Rate are still expected, which could improve affordability for mortgages. Wages in Northern Ireland have also grown strongly in recent months. We expect that this rate will slow, particularly as businesses continue to face cost pressures and the signs of a slight slowdown in the labour market have started to emerge, but wages are still likely to keep rising.
These developments – slowing inflation and rising wages – have been the main factors boosting confidence for consumers across Northern Ireland, according to the Danske Bank Consumer Confidence Index. The survey has reported continued robustness in confidence over recent quarters.
It is worth noting that despite the continued rise in house prices, Northern Ireland remains one of the most affordable regions in the UK to buy a home. A relatively lower average house price (at £185,000 here compared to £269,000 in the UK as a whole) is also a key reason why we expect that the recent changes to Stamp Duty will have a more modest impact on activity in the local housing market.
Given the constraints to supply, the ongoing resilience of homebuying demand and the easing of economic challenges directly related to household finances, we expect that house prices in Northern Ireland will continue to rise, albeit at slower rates than those experienced in the most recent quarters.
A housing market with prices that are expected to continue to grow and yet remains relatively more affordable than other areas in the UK (with prices around five times the annual average salary here compared to seven times in the UK as a whole) suggests Northern Ireland is still a great place to buy a home.
This article was published in The Irish News on 22 July 2025.
