Facing the Challenges in the Northern Ireland Housing Market
-
Upload
edan-weiss -
Category
Documents
-
view
31 -
download
0
description
Transcript of Facing the Challenges in the Northern Ireland Housing Market
Facing the Challenges in the Northern Ireland
Housing Market
University of Ulster Belfast Campus
25 March 2009
PROFESSOR ALASTAIR ADAIR
Pro-Vice-ChancellorUniversity of Ulster
MR NIGEL SMYTH
DirectorCBI Northern Ireland
Agenda
• Affordability
• Transactions and stock levels
• How do we stimulate the market?
• Key issues for discussion
Drivers of Housing Demand
SUPPLY
FINANCE CONFIDENCE / ECONOMY
CHALLENGESAffordability
• Consumer interest/demand
• Availability of finance
• Tightening of lending criteria in particular level of deposits required
• Lack of innovative equity schemes
• Increase in unemployment risk
• Market uncertainty
• Debt levels
• Managing the media
Level of Sales across Price Ranges (NI)
0%10%
20%30%
40%50%
60%70%
80%90%
100%
<100,000 <150,000 <200,000 <250,000 >251,000
Price
Pe
rce
nta
ge
Q4/2007
Q4/2008
Source: University of Ulster House Price Index
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
All years Data at 31 December 2008
%
£0k
£50k
£100k
£150k
£200k
£250kMortgage Repayment asa % of Gross earnings(90% mortgage)
Mortgage Repayment asa % of Net Disposableearnings (90%Mortgage)House Prices
Sources: DETI, Ulster Bank, Nationwide HPI
House Prices and Housing Costs as a % of combined household earnings
SOURCING FINANCEIncome Criteria
Abbey• 3.8 Single, 3.8 Joint• Over 20k pa – 4 Single, 4 Joint• Over 25k pa – 4.3 Single, 4.3 Joint• Over 35k pa – 4.8 Single, 4.8 Joint• Over 80k pa – 5.1 Single, 5.1 JointA&L• 4.75 Single, 4.5 Joint
Halifax• 4.5 Single, 4 Joint
Nationwide • 4.1 Single, 4.1 Joint
Northern Rock• 3.5 Single, 3.2 Joint• Over 17.5k pa – 4 Single,
3.7 Joint• Over 32.5k pa – 4.5
Single, 4.2 Joint
Progressive• 3.75 Single, 3.75 Joint –
90% LTV• 4 Single, 4 Joint – 80%
LTV
Woolwich • 4 Single, 4 Joint –
Normally• 5 Single, 5 Joint – Excellent score
SOURCING FINANCEIncome Criteria
Bank of Scotland• 4.5 Single, 4 Joint
C&G• 3.05 Single, 1.05 Joint• Over 10k pa – 4 Single, 2.9 Joint• Over 15k pa – 4.4 Single, 3.55 Joint• Over 20k pa – 4.6 Single, 3.85 Joint• Over 25k pa – 4.85 Single, 4.1 Joint• Over 30k pa – 5.25 Single, 4.7 Joint• Over 40k pa – 5.25 Single, 4.75 Joint
SOURCING FINANCEIncome Criteria
Typical New Home LTV Rates • Abbey – New Build Houses 80%
LTV. New Build Flats 70% LTV• A&L – New Build Houses is 85%
LTV. New Build Flats 70% LTV• Bank of Ireland – All New Builds
75% LTV• Bank of Scotland – Max LTV in
product range is 75%• C&G – All New Builds 80% LTV• Coventry - New Build Houses is
85% LTV. New Build Flats 75% LTV
• Halifax – All New Builds 80%• Nationwide – New Build Houses
90% LTV (max LTV in product range is 85%). New Build Flats 75% LTV
• Northern Bank - 95% and potentially 100% LTV. No restrictions on new builds or apartments
• Northern Rock - All New Builds 85% LTV (Repayment vehicle required also)
• Progressive - Max LTV for New Build Houses is 85%, for New Build Flats is 70%
• Ulster Bank –Up to 90% LTV, 95% with Momentum, co-ownership deal at 100%. No restrictions on new builds or apartments, mortgages have to be on a repayment basis.
• Woolwich – All New Builds 85% LTV
Are these products actually available or are prohibitive criteria preventing lending?
• Transactions
• Demand in comparison to resale market
• Stock Levels
• Valuation and pricing
• Has the new homes market bottomed out?
CHALLENGESNew Homes market
Transaction Trends
2005 2006 2007 2008
Qtr 1 2,037 2,166 2,120 896
Qtr 2 2,461 2,285 2,206 1,044
Qtr 3 2,772 2,291 1,480 670
Qtr 4 2,478 2,507 1,669 704
TOTAL 9,748 9,249 7,475 3,314Overall Annual % Change
-5.1% - 19.2% - 55.7%
Source: University of Ulster House Price Index
0
500
1,000
1,500
2,000
2,500
3,000
Qtr 1 Qtr 2 Qtr 3 Qtr 4
Quarter
Num
ber
2005
2006
2007
2008
Transaction Trends
Source: University of Ulster House Price Index
New Home Sales vs. Resale Stock Sales Q1 2007 – Q1 2009
(percentage of total sales)
Source: Straw poll results from 3 top sales agents in NI
0
10
20
30
40
50
60
70
80
Quarter
Perc
en
tag
e o
f T
ota
l S
ale
s
NEW HOME SALES
RESALE STOCKSALES
Total Building Control Applications (Belfast area)
0250500750
1,000
1,2501,5001,7502,0002,250
2006 2007 2008 2009 (to10/3/09)
Year
To
tal
Ap
pli
cati
on
s
Total Applications
Source: Belfast City Council Building Control
Building Control Applications – Public Housing and Private Housing Speculative
(Belfast Area)
0
250
500
750
1,000
1,250
1,500
1,750
2006 2007 2008 2009 (to10/3/09)
Private Speculative
Public Speculative
Source: Belfast City Council Building Control
0
200
400
600
800
1000
1200
Quarter
No
Private housing registeredstarts
Private dwellingcompletions
Private Housing, Starts And Completions
(Belfast Area)
Source: Belfast City Council Building Control
NHBC New Build Registrations /Finals (Completions)
500.0
2500.0
4500.0
6500.0
8500.0
10500.0
12500.0
2003 2004 2005 2006 2007 2008
Registrations
Finals
NHBC statistics: March 2009
ARE WE SEEING AN UPTURN IN THE MARKET?
The Estate Agents experience
• “The reduction in prices from 30-50% compared to 2007 figures has led to a significant rise in enquiries and sales levels are also improving”
• “Since beginning of 2009, enquiries and viewings have increased by approximately 30% compared to the previous 12 months period”
• “Mortgage approvals have increased by 25% in the first quarter of 2009 compared to the first quarter of 2008”
• “First time buyers are attempting to re-enter the market. Attaining finance is still the main obstacle”
WOODBROOK LEVEL OF INTEREST (CARVILL GROUP)
0
10
20
30
40
50
60
70
80
90
16/01/2009 23/01/2009 30/01/2009 06/02/2009 13/02/2009 20/02/2009 27/02/2009 06/03/2009 13/03/2009 21/03/2009
Week Ending
Nu
mb
er
of
En
qu
irie
s
A1
A2
A10
A13
T1
T2
T3
T6
T9
315 - 316
TOTAL
How do we stimulate the market?
• Property Professionals
• Chartered Valuation Surveyors
• Financial Sector
• Government
Property Sector
• Realistic pricing
• Buyer protection schemes
– Property Developer Guarantees
– Buyer Insurance Protection
• Plan for market recovery and up-skilling in potential growth sectors
Chartered Valuation Surveyors
What impact are valuations having on today’s
property market?
Financial Sector
• Building Societies/banks to be encouraged to increase mortgage lending
• More availability of joint equity schemes in partnership with developers to move sales of new homes
• Banks should convey the message that they are open for business and demonstrate that they are lending (on reasonable conditions)
Government• Does the NI Executive have a robust recovery strategy for
the economic/financial crisis?
• Need to ensure financial support is available for co-ownership
• Work in partnership with the sector to develop innovative options to improve affordability
• Maximise the release of labour-intensive social housing projects
• Need to develop an economic recovery plan for Northern Ireland
• Affordability – do you agree with this analysis?
• Finance – is there finance available for FTB with 85 – 90% LTV ratios on reasonable terms?
• Valuations – are valuations currently undermining the market further?
• Communications – What are the key messages we need to convey to the public?
• Confidence – what steps are needed to restore confidence to the housing market?
Key issues for discussion