Belfast BriefingThe UK's largest building society is expected to provide further proof this week that the North's housing market has lost its sparkle and the slowdown is beginning to create trouble in an already nervous economy.
The Nationwide Building Society's monthly housing review is a good barometer of consumer sentiment and confidence . When it's positive, the economy is generally quite healthy. But when the review suggests, as it is likely to on Thursday, that house price growth is not only slowing but in some areas has stalled, then this, taken in the context of recent mounting job losses in the North, will not be positive.
Nationwide's chief economist Fionnuala Earley has been warning for sometime that homeowners in the North should brace themselves for a downturn in what she has described as "phenomenal" house price growth.
She has forecast a 5 per cent fall in house prices next year, and believes Northern Ireland will be the worst-performing region in 2008.
According to the Nationwide, the region is now the least-affordable place for first-time buyers. In some cases the price of a first-time property could be equivalent to eight times a first-time buyer's annual salary.
What this means in real terms is that the number of first-time buyers has fallen to its lowest level in Northern Ireland in more than two decades.
It is now estimated that house prices in some areas, particularly Belfast and Newry, have increased by three times their value in just 10 years, but the number of first-time buyers has fallen by 50 per cent in the last five years.
Statistics from the Council of Mortgage Lenders show there has been a sharp drop in the number of new loans approved by financial institutions for house purchases in the North. In August 2006, an estimated 2,300 mortgage loans, valued at more than £270 million were approved. By August 2007, the number had fallen to 1,400 with a value of about £193 million.
The one thing that is rising in Northern Ireland is the figure that causes major concern for homeowners and first-time buyers alike - interest payments as a percentage of income. In August 2006 this stood at 14.6 per cent; a year later, the figure had risen to 18.1 per cent.
Northern Rock may not have had a major presence in Northern Ireland - it only has one branch in Belfast - but its recent financial woes shows why some borrowers in the North prefer to choose a building society over a bank for their mortgage and why, in particular, some of the local societies are doing so well.
Northern Ireland has just two locally owned building societies - the Progressive Building Society and the City of Derry Building Society. Both have enjoyed a period of strong growth in parallel with recent buoyant house prices.
The City of Derry has an asset base of just £35 million (€48.7 million) compared to, for example, the Nationwide Building Society which has an asset base of £100 billion.
The Progressive's current asset base stands at around £1.4 billion - it has more than 14,000 borrowing members and some 80,000 saving members out of a total population of just over 1.6 million people.
It says its ethos puts a great onus on the society's management to lend money in a prudent manner.
Last year it lent an estimated £277 million in Northern Ireland; from January to October of this year that figure has risen by 15 per cent.
Progressive believes one of the reasons it has continued to grow in the North despite fierce competition is because of its "local strengths".
"Our members seem to value our local ownership, and our independence has enabled us to avoid developments such as call centres that people really hate - anybody ringing one of our branches talks to a member of staff based there, and because of our low staff turnover it is very likely that you will be able to talk to the same person 12 months later."
With homeowners and buyers facing a very uncertain future in the North, it might come as some small comfort to hear a Northern Ireland accent at the end of the phone if they do need some help or advice in the months ahead.
