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Rocketing property prices cripple NI incomes
05/07/2007
With the housing boom being felt most in Northern Ireland above all other countries in Great Britain, people in the province are feeling the effects on their wallets more than most.
While the cost of shelling out for a property was around the same in relation to the rest of Britain a decade ago, the spiralling house prices in Northern Ireland have now accelerated above the rate of salary increases in such a way that homeowners in the province are more financially squeezed than their British counterparts.
According to a report by PricewaterhouseCoopers (PwC), in 2007 prices have risen to 9.5 times the average annual salary, meaning that mortgage repayments now comprise 150 per cent of weekly net wages, which is nearly twice the level seen in 1997.
While property prices are now 16 per cent higher than the UK average, salaries in Northern Ireland are little more than 80 per cent of the rest of Great Britain.
As a result of this, people in Northern Ireland are turning to borrowing to offset their mortgage costs and fund consumer spending.
However, PwC says that people will be forced to stop spending as much, as a fifth of all of people's disposable income is swallowed up in interest on what they have borrowed and therefore the growth of debt levels are outstripping increases in salary.
Philip McDonagh, chief economist at PricewaterhouseCoopers in Northern Ireland, said: "While the local economy continues to perform reasonably well, households are facing a financial squeeze due to a combination of modest earnings growth, rising domestic rates and utility bills, higher petrol prices and increased debt repayment costs.
"Looking ahead, rising debt service will contribute to slower consumer spending growth over the next two to three years and this will impact the services sector, which has underpinned economic growth in recent years."
As a result of this solicitors in Northern Ireland are more likely to see companies trying to recover debt from customers or people looking to remortgage than they are to see first-time buyers asking for completion on a new house purchase.
Contact us for legal advice
While the cost of shelling out for a property was around the same in relation to the rest of Britain a decade ago, the spiralling house prices in Northern Ireland have now accelerated above the rate of salary increases in such a way that homeowners in the province are more financially squeezed than their British counterparts.
According to a report by PricewaterhouseCoopers (PwC), in 2007 prices have risen to 9.5 times the average annual salary, meaning that mortgage repayments now comprise 150 per cent of weekly net wages, which is nearly twice the level seen in 1997.
While property prices are now 16 per cent higher than the UK average, salaries in Northern Ireland are little more than 80 per cent of the rest of Great Britain.
As a result of this, people in Northern Ireland are turning to borrowing to offset their mortgage costs and fund consumer spending.
However, PwC says that people will be forced to stop spending as much, as a fifth of all of people's disposable income is swallowed up in interest on what they have borrowed and therefore the growth of debt levels are outstripping increases in salary.
Philip McDonagh, chief economist at PricewaterhouseCoopers in Northern Ireland, said: "While the local economy continues to perform reasonably well, households are facing a financial squeeze due to a combination of modest earnings growth, rising domestic rates and utility bills, higher petrol prices and increased debt repayment costs.
"Looking ahead, rising debt service will contribute to slower consumer spending growth over the next two to three years and this will impact the services sector, which has underpinned economic growth in recent years."
As a result of this solicitors in Northern Ireland are more likely to see companies trying to recover debt from customers or people looking to remortgage than they are to see first-time buyers asking for completion on a new house purchase.
Contact us for legal advice
