According to the latest Royal Institution of Chartered Surveyors (RICS) and Ulster Bank Residential Market Survey, the new buyer enquiries balance moved into negative territory for the first time since June 2020.
Limited stock is a pattern that the NI residential market has seen for many months, and this has continued into the second half of 2022, with respondents pointing to a fall in new instructions to sell (a net balance of -17%).
Although demand is seen to be easing, house prices are still on the rise with a net balance of 84% of respondents reporting a rise in house prices over the past quarter, and a net balance of 21% expecting house prices to rise over the next three months. The price expectations balance is though now at its lowest since September 2020 reflecting a more cautious outlook due to higher interest rates and a weakening economic landscape.
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Regarding the sales outlook for the next quarter, a net balance of 25% of respondents expect sales to increase over the next three months. This is down slightly from the previous month where a net balance of 32% of respondents expected a rise in sales.
Samuel Dickey, RICS Northern Ireland Residential Property Spokesman, said: "The demand for property of all types is still outstripping supply. The rental market also continues to be strong. However, it isn't surprising to see some cooling in the market which has been so buoyant for some time. We will likely see the higher interest rates and the cost of living continue to have some impact on demand in the coming months. But it is likely that the lack of supply will continue to be the main factor in the market."
Terry Robb, Head of Personal Banking at Ulster Bank, added: "Mortgage demand remains relatively good, and interest rates are still at low levels by historic standards. Our expectation is that there will continue to be good demand from homebuyers in Northern Ireland. The biggest influence on the market continues to be the low levels of supply of properties available for potential buyers to choose from. With regard to existing mortgage customers, nine in ten of our mortgage accounts are on a fixed rate as rising interest rates are encouraging customers to secure a new fixed rate deal to bring some certainty at this time."
