North's House Prices Plummet

House prices in the north of Ireland have plunged by 18% on this period last year, according to a Nationwide Building Society survey. The average house price is now £183,476 compared to a figure of about £215,000 last June.

Prices are still significantly higher than two years ago, but the three-month view of the housing market shows a continuing decline.

Tom McClelland, Royal Institution of Chartered Surveyors, said estate agents were facing redundancies and office closures because of the stagnant market. "People are being paid off because there is not activity there," he said.

"There has been a big price hike over the last two years, that has to be adjusted and the adjustment is painful."

People are taking their homes off the market, he said and investors had now left. In the boom, first time buyers had been left behind, but he said they could now re-enter the market.

Professor Alasdair Adair at the University of Ulster, said of the drop in the level of activity in the market. "We know there are people out there who want to buy at the moment. The problem is getting the capacity to borrow money and therefore we need to get some stability back into the lending market."

Concern is now growing that a sharp correction in the housing market will spread to consumer spending and the rest of the economy.

Furniture and household goods retailers are already suffering. UK house prices fell by 0.9% on average last month, according to the Nationwide survey.