House prices in Northern Ireland have been falling for three years, according to a study of chartered surveyors.

The balance of Northern Ireland respondents to the RICS (Royal Institution of Chartered Surveyors) housing market survey, supported by Ulster Bank, has been reporting falling prices every month since August 2007.

In the latest survey (August 2010), a net balance of -45% are reporting prices falling: 45% saying that they have been falling, 55% saying that prices have remained the same, and none saying that prices have been rising. (A negative price balance indicates falling house prices.)

RICS housing spokesman Tom McClelland says that the scale of Northern Ireland’s housing bubble has led to a big price correction.

"House prices rose significantly between 1995 and 2004, and, at that stage, economic fundamentals suggest price growth should have moderated. But, instead, for a number of reasons, the opposite happened. This created a large price bubble between 2004 and 2007 that has been correcting," Mr McClelland explained.

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"There is certainly much more stability in the market now than there was when the house price correction was at its most intense. There is also, clearly significant variation in the marketplace currently, in terms of different areas and property types.

"There is also evidence of a return of investors, despite the squeeze on Housing Benefit impacting on the private rented sector. However, unsurprisingly, the process of correction continues in areas where price growth was most out of kilter with fundamentals," he continued.

"The challenge for the housing market now is the scale of public spending cuts coming our way, which will hit the local economy hard. Prices have corrected significantly to date, and can only fall so far, but with people in our public sector-dependent economy fearing for job security, there remain clear risks. That said, we expect the mid-term trend to be largely flat prices. The recovery will be a long-term one," Mr McClelland added.

Derek Wilson, hHad of Lending Products at Ulster Bank, said: "We have been working hard to help aspiring homebuyers and home-movers, but the market is challenging. Many buyers are understandably circumspect about purchase decisions, and should continue to make judgements based on their own circumstances."

(GK/BMcC)