A PowerPoint Chart Pack covering all aspects of the Northern Ireland Housing Market. It covers house prices, mortgage activity, housing starts and completions, affordability etc. Comparisons are made with the UK, Republic of Ireland and UK regions.

1. Northern Ireland
Housing Market Update
Issued 13 December 2013
Richard Ramsey
Chief Economist Northern Ireland
richard.ramsey@ulsterbankcm.com
Twitter @UB_Economics
Slide 1

2. Contents
Slide Numbers
1. Housing Market Summary
3-6
2. House Price Performance
7-20
3. UK & NI Regional House Price Performance
21-32
4. Mortgage Activity & Residential Property Transactions
33-63
- Negative equity, consumer stress, student debt & labour market conditions
5. Housing Starts & Completions
64-82
6. Housing Affordability & Interest Rates
83-101
7. Demographic Trends & Projections
102-105
Slide 2

3. Northern Ireland
Housing Market
Summary
Slide 3

4. Summary of Pre & Post boom housing market conditions
Jan 2005
£
285,000
250,000
215,000
Q3 / Q4 2013
Unemployment 29,000 & falling
Net inward migration rising
New investors & lenders entering the market
Credit availability increasing
NI house price 69% of UK average
NI lowest house prices bar Scotland
95% LTVs freely available & 75% LTV 5yr fix 5.2%
Average UK SVR 6.6%
Expectations prices would rise
Economic confidence high & rising
Auctions not a major feature of property market
Equity withdrawal increasingly popular
Household formation age-group (25-34) rising
Unemployment 61,000 (Oct) & falling
Net outward migration continuing
Credit conditions not what they were
Fewer lenders
NI house price 52% of UK average
NI lowest average house prices in UK
95% LTV's returning
Average UK 75% LTV 5yr fix is 3.37% (Oct-13)
Average UK SVR 4.36% (Oct-13)
Economic confidence low & job insecurity high
Expectations prices have stabilised and may rise
Distressed sales at auctions
Negative equity widespread, equity withdrawal more
limited
Inflationary pressures (food & energy) impacting
upon affordability
Private rental sector more popular
Household formation age-group (25-34) peaking
180,000
Key issues going forward
145,000
110,000
BoE to raise Bank Rate eventually
Public expenditure cuts, tax rises & benefit cuts (e.g. housing benefit)
Lack of employment opportunities for younger generation & tomorrow's FTBs
FTBs increasingly have student debt / tuition fees
Debt repayment / repossessions when interest rate only mortgages expire
Outworking of NAMA & corporate / household de-leveraging
Undersupply of housing and lack of funding for sector
Scale of competition within banking - new products?
Planning changes?
House-building per capita at a lower rate than in 1960 - longer term implications?
75,000
Jan-05
Apr-06
Jul-07
Oct-08
Jan-10
Apr-11
Jul-12
Oct-13
Slide 4

5. NI Housing Market Summary (1)
Residential property prices posted their 2nd successive quarterly rise of 2% q/q in Q3 2013 according to DFP’s
Residential Property Price Index. Q3 2013 also represented the first quarter in almost 6 years (Q4 2007) that NI
residential property prices have posted year-on-year increases. The median residential property prices are now 54%
below their peak.
According to DFP’s NI Residential Property Price Index, transactions increased by 7% q/q in Q3 2013 and were 12%
higher than the corresponding quarter in 2012. The RPPI uses data from the HMRC and includes mortgages and
sales through auctions. There were 14,919 property transactions in NI in over the year to Q3 2013. This represents
a 15% rise on the previous 4 quarter period and is 59% above the low in Q2 2009.
The total level of NI property transactions in the 4 quarters to Q3 2013 was 64% below the Q1 2007 peak (41,442).
The value of NI’s residential property transactions has fallen by £5.7bn (80%) since the Q1 2007 peak. The steep fall
in property transactions has seen activity within the Business Services & Finance sector fall (as of Q2 2013) by 51%
since Q4 2006. The equivalent sector in the UK is just 0.3% below its pre-downturn peak.
According to the Council of Mortgage Lenders (CML), NI mortgage activity increased by 22% q/q and 22% y/y in Q3
2013. Over the last 4 quarters to Q3 2013, there were 9,500 mortgages in NI. This compares with 27,000 in 2006. As
a result, mortgage activity in NI is running at 35% of 2006 levels and 73% below the peak in 2003 (35,100).
The incidence of negative equity has been growing in NI but falling in most other UK regions. According to the CML,
35% of mortgages taken out since 2005 in NI were in negative equity in October 2012. This was 3.5 times the
corresponding rate for the UK (10%). Other studies estimate 20-25% of all NI mortgage holders are in negative
equity. This is more than any other UK region and compares with 10.5% of UK mortgage holders in the mid-1990s.
According to the NHBC, the sale of new houses hit a series low in Q2 2013. New house sales over the year to Q2
2013 were 84% below 2006 levels.
Slide 5

6. NI Housing Market Summary (2)
The NI FTB mortgage market is expected to hit a 6-yr high in mortgage completions for 2013. Nevertheless, FTB mortgage
activity over the year to Q3 2013 remains 37% below 2006 levels. This is broadly in line with the UK (-40%). The FTB
segment accounted for 59% of the mortgage market (UK=449%) over the year to Q3 2013 – its highest share since 2001.
Meanwhile there has been virtually no recovery in NI’s ‘home mover’ market. Mortgage completions within NI’s ‘home
mover’ market over the year to Q3 2013 were 78% below 2006 levels. This represents the lowest number of mortgage
completions since 1974. By comparison, the UK ‘home mover’ market is 54% below its 2006 levels.
NI’s remortgage market has plummeted over the last six years. During the year to Q3 2007, there were 32,900
remortgages in Northern Ireland. Over the year to Q3 2013, there were 28,200 fewer (or -86%) remortgages.
In 2011 there were just 6,977 house completions – the lowest outturn since 1994. The corresponding figure for 2012 was
7,920. A second consecutive annual increase is estimated for 2013 with around 8,700 units. This is 52% below the 2006
peak of 18,000 units. House completions in the UK and the RoI are 40% and 91% below their respective pre-crisis peaks.
NI is currently building fewer houses per capita than it was in 1960. At its peak (2006), NI was building 10.3 housing units
per 1,000 population. 2013’s estimate is 4.7 per 1,000 population which is still three times the rate in the Republic of
Ireland (1.6) and twice the rate in the UK (2.2).
Housing affordability has improved markedly for all house buyers. According to Nationwide, mortgage payments as a
percentage of disposable incomes for first-time buyers is at a 15-year low. But disposable income after necessities (food &
energy) is also important. Food, drink and energy inflation has increased by 42% between Q3 2007 and Q3 2013.
Improving mortgage affordability is not all one-way traffic due to tax and benefits changes alongside inflationary pressures.
Not least, food and energy inflation.
The Bank of England’s ‘bank rate’ remains at its lowest level since 1694 and can only go up. The BoE is expected to keep
rates on hold into 2015. Average interest rates on 5-yr fixed rate mortgages (75% LTV) recently hit a record low.
NI’s household formation category (25-34 years of age) has almost peaked and is expected to fall over the next decade.
Slide 6

7. House Prices
&
Performance
Slide 7

8. Until May 2012 there were 5 house price surveys in NI…
The Halifax House Price Index (Quarterly)
The Halifax produces a UK wide House Price Index based on their own mortgage approvals. A regional index for Northern
Ireland is also produced on a quarterly basis.
www.lloydsbankinggroup.com/media1/economic_insight/halifax_house_price_index_page.asp
The Nationwide House Price Index (Quarterly)
The Nationwide produces a UK wide House Price index based on their own mortgage approvals. A regional index is
produced for Northern Ireland on a quarterly basis. Indices and average prices for the UK and regions are produced using a
updated mix-adjusted House Price methodology. Like the Halifax and NI RPPI this allows ‘typical’ property to be priced
over time on a like-for-like basis.
www.nationwide.co.uk/hpi
Bank of Ireland / Northern Ireland Housing Executive / University of Ulster Quarterly House Price Index
The Northern Ireland Quarterly House Price Index is produced by the BoI, NIHE & UU. The market evidence is sourced
using a sample of estate agents across Northern Ireland. The price statistics are simple arithmetic averages. The index is
weighted to reflect the market share of each property type (e.g. terraced, semi-detached, apartment etc)
www.bankofireland.co.uk/bank-of-ireland-group/financial-news/boi-house-price-index/
Office for National Statistics UK House Price Index (Monthly)
The ONS House Price Index (HPI), previously published by the Department for Communities and Local Government
(DCLG), is a monthly release that publishes figures for mix-adjusted average house price indices for the UK and its regions.
The index is calculated using mortgage financed transactions that are collected via the Regulated Mortgage Survey by the
Council of Mortgage Lenders. These cover the majority of mortgage lenders in the UK.
http://www.ons.gov.uk/ons/rel/hpi/house-price-index/october-2012/stb-october-2012.html
RICS Housing Market Survey, Northern Ireland (Monthly)
The Royal Institution of Chartered Surveyors (RICS) & Ulster Bank Housing Market Survey. Uses a house price balance r
diffusion index. The balance = the proportion of surveyors reporting a rise in price minus those reporting a fall.
Slide 8

9. But an important 6th survey has been added:
NI’s Residential Property Price Index (RPPI)
RPPI Background
Until May 2012, there were 5 surveys that provided slightly different views on either the average house
price or the direction of house prices. On the 23rd May the Department of Finance & Personnel (DFP)
added a 6th survey.
The latest addition has a number of distinct advantages over the existing set of surveys and is likely to
become the one most closely followed.
The new Northern Ireland Residential Property Price Index (NI RPPI), unlike the sample‐based surveys,
includes all the property transactions notified to Her Majesty’s Revenues & Customs (HMRC) within
Northern Ireland. Therefore it includes almost the complete set of residential property transactions from
cash sales (including auctions) to mortgages.
The NI RPPI includes the simple average and median (i.e. the price below/above which half of properties
are sold). However, both of these measures do not take account the different type and characteristics
(e.g. size, location) of properties sold each quarter.
The NI RPPI addresses this issue using a preferred method that calculates a standardised price, which is a
hypothecated value based on a weighted combination of prices (e.g. 0.5% of a detached house in North
Down, 4% of a terraced house in Belfast etc). This method provides the best measure of an index
reflecting pure price changes.
Slide 9

10. Latest Surveys: Summary House Price Performance
NI & UK House Price Changes for All Property Types
House Price Survey
Quarterly Change
Q3 2013
Year‐on‐Year
Change Q3 2013
Change relative to
pre‐downturn peak
NI
UK
NI
UK
NI
UK
Nationwide
1.1%
2.2%
1.0%
4.3%
‐52.5%
‐7.9%
Halifax
‐0.2%
2.0%
‐24.8%
6.2%
‐60.4%
‐14.7%
DCLG
DFP Residential Property Price Index
University of Ulster / Bank of Ireland
‐0.6%
2.5%
0.4%
3.6%
‐49.4%
0.9%
2.0%
N.A
1.0%
N.A
‐54.0%
N.A
1.3%
N.A
‐4.8%
N.A
‐49.1%
N.A
The Halifax figures showing a 24.8% y/y decline in Q3 2013 looks to be
at odds with all the other surveys
Slide 10

11. Latest Surveys Average House Prices
Average House Prices ‐ All Property Types Q3 2013
Survey
Survey Coverage
Sample Size
NI
UK
Mortgages Only Most Providers
Low
£130,000
Nationwide Mortgages Only
Very Low
£108,671
£246,000
18.0%
£170,918
Halifax (mix‐adjusted average price)
Halifax Mortgages Only
Very Low
£90,951
£170,386
University of Ulster / Bank of Ireland
DFP NI Residential Property Price Index (RPPI)
Mortgages & Cash Sales
Low
£129,777
‐
Mortgages, Cash Sales & Auctions
Very High
DCLG (mixed‐adjusted average price)
Nationwide
(mix‐adjusted average price)
NI RPPI Mean (simple average)
"
£115,316
‐
NI RPPI Median*
"
£100,500
‐
NI RPPI Standardised Price**
"
£98,612
‐
* Median (i.e. the price below / above which half properties are sold) removes the distortion on average from v.high / low prices
** Standardised Price is preferred method for measuring house price changes as it takes account the different type and characteristics (e.g. size, location)
Slide 11

12. NI surveyors have reported house price growth for 6
consecutive months
% Balance
Net balance of surveyors reporting a fall / rise in
NI average house prices
100
75
Price
Rises
50
67
Months
25
0
-25
-50
Price
Falls
-75
Source: RICS
-100
Nov-06
Nov-07
Nov-08
Nov-09
Nov-10
Nov-11
Nov-12
Nov-13
Slide 12

13. Residential property prices have fallen 54% peak-totrough. Latest survey suggests prices have bottomed out
NI Residential Property Price Index
Index Q1 2005 =
100
Index (2005=100)
200
180
Prices now
54% below
peak
160
140
120
100
Source: DFP RPPI
80
2005 Q3
2007 Q3
2009 Q3
2011 Q3
2013 Q3
Slide 13

14. RoI house prices have been rising & now 48% below peak.
Unlike NI RPPI, RoI’s CSO data does not include cash sales
NI & RoI Residential Property Prices
Quarterly
Index Q1 2005 = 100
200
NI (RPPI)
RoI
NI ONS*
175
150
125
-49% below peak
100
-54% below peak
75
-48% below peak
Source: DFP, CSO, ONS* includes mortgages only
50
2005 Q3
2007 Q3
2009 Q3
2011 Q3
2013 Q3
Slide 14

15. In NI, terraced properties (-59%) have fallen the most
from peak & Semi-Detached (-53%) the least
Northern Ireland Residential Property Prices
Index Q1 2005 = 100
225
Detached
Semi-Detached
Terraced
Apartments
200
175
150
125
100
Q3 2013 Relative to Peak
75
Source: DFP RPPI
Detached
Semi-Detached
Terraced
Apartments
-54%
-53%
-59%
-57%
50
2005 Q3
2007 Q3
2009 Q3
2011 Q3
2013 Q3
Slide 15

16. NI Residential Property Price Index by property type
Northern Ireland Residential Property Price Index
Index 2005 Q1 = 100
All Property Prices
Detached
Semi‐Detached
Terraced
Apartments
2005 Q1
2005 Q2
2005 Q3
2005 Q4
2006 Q1
2006 Q2
2006 Q3
2006 Q4
2007 Q1
2007 Q2
2007 Q3
2007 Q4
2008 Q1
2008 Q2
2008 Q3
2008 Q4
2009 Q1
2009 Q2
2009 Q3
2009 Q4
2010 Q1
2010 Q2
2010 Q3
2010 Q4
2011 Q1
2011 Q2
2011 Q3
2011 Q4
2012 Q1
2012 Q2
2012 Q3
2012 Q4
2013 Q1
2013 Q2
2013 Q3
100
100
100
100
100
104
106
105
101
100
110
112
110
110
103
113
115
113
114
104
117
117
117
118
112
128
124
129
133
120
142
137
142
149
131
159
151
160
168
154
173
165
174
187
164
190
190
194
195
180
198
208
198
201
177
189
199
188
192
176
172
181
173
176
163
160
168
165
161
157
146
152
147
149
140
132
139
134
135
121
123
126
122
127
114
125
130
125
126
120
125
128
124
128
119
125
131
126
127
120
122
128
122
118
114
123
127
125
117
114
120
125
122
113
115
114
120
116
106
106
107
116
109
98
102
105
110
109
97
98
103
111
106
93
100
100
109
103
90
94
93
96
99
82
85
92
97
95
84
81
90
94
94
82
79
88
91
92
80
79
88
93
91
78
78
90
95
92
79
78
91
97
93
82
78
Q/Q Change
Y/Y Change
Fall from Peak
2%
1%
1%
3%
1%
1%
3%
‐1%
0%
‐1%
‐54%
‐54%
‐53%
‐59%
‐57%
Source: DFP NI RPPI November 2013, Note % changes are calculated using unrounded figures
Slide 16

17. Standardised Residential Property Price & Index by NI Region
Belfast
Standardised
Price
2005 Q1
2005 Q2
2005 Q3
2005 Q4
2006 Q1
2006 Q2
2006 Q3
2006 Q4
2007 Q1
2007 Q2
2007 Q3
2007 Q4
2008 Q1
2008 Q2
2008 Q3
2008 Q4
2009 Q1
2009 Q2
2009 Q3
2009 Q4
2010 Q1
2010 Q2
2010 Q3
2010 Q4
2011 Q1
2011 Q2
2011 Q3
2011 Q4
2012 Q1
2012 Q2
2012 Q3
2012 Q4
2013 Q1
2013 Q2
2013 Q3
Belfast
RPPI
Outer Belfast
Standardised
Price
Outer Belfast
RPPI
£104,003
£105,157
£114,360
£114,776
£117,336
£132,694
£148,334
£167,779
£178,508
£196,923
£207,252
£190,011
£171,040
£159,952
£150,062
£128,506
£121,157
£129,919
£133,120
£131,115
100
101
110
110
113
128
143
161
172
189
199
183
164
154
144
124
116
125
128
126
£114,980
£119,811
£125,622
£128,264
£130,833
£143,740
£160,533
£181,559
£199,326
£219,529
£230,610
£227,866
£203,268
£190,570
£166,243
£149,341
£137,320
£141,616
£142,832
£141,738
100
104
109
112
114
125
140
158
173
191
201
198
177
166
145
130
119
123
124
123
East of
N.Ireland
Standardised
Price
£106,397
£108,027
£113,994
£117,352
£121,886
£131,595
£146,126
£165,535
£186,351
£204,953
£214,788
£200,846
£186,905
£173,660
£157,575
£148,102
£135,413
£133,312
£134,815
£136,499
£125,067
£125,319
£122,164
£111,777
£105,647
£105,577
£104,826
£100,338
120
120
117
107
102
102
101
96
£140,301
£143,749
£142,040
£131,057
£126,151
£122,440
£121,580
£119,201
122
125
124
114
110
106
106
104
£93,474
£93,953
£93,050
£90,345
£87,283
£90,414
£93,042
90
90
89
87
84
87
89
£111,526
£111,205
£110,416
£107,410
£107,584
£108,284
£109,869
97
97
96
93
94
94
96
Q/Q Change
Y/Y Change
Fall from Peak
3%
0%
‐55%
1%
0%
‐52%
West & South of
N. Ireland
West & South of
Standardised
N.Ireland RPPI
Price
£109,431
100
£118,383
108
£124,405
114
£130,874
120
£137,479
126
£147,251
135
£160,860
147
£179,770
164
£192,112
176
£210,131
192
£208,016
190
£199,899
183
£187,019
171
£167,304
153
£156,794
143
£143,240
131
£136,038
124
£139,776
128
£135,754
124
£137,082
125
100
102
107
110
115
124
137
156
175
193
202
189
176
163
148
139
127
125
127
128
North of
N. Ireland
Standardised
Price
£104,955
£110,841
£118,782
£123,087
£130,134
£139,108
£153,639
£166,938
£179,541
£196,055
£205,713
£199,752
£179,400
£171,354
£154,838
£142,290
£128,963
£125,542
£124,314
£129,493
£129,659
£131,373
£128,437
£122,871
£117,006
£112,857
£111,979
£107,039
122
123
121
115
110
106
105
101
£127,771
£127,532
£119,227
£122,132
£113,685
£108,049
£104,789
£102,873
122
122
114
116
108
103
100
98
£134,960
£132,305
£131,125
£124,628
£116,962
£112,089
£108,812
£105,858
123
121
120
114
107
102
99
97
£99,458
£99,178
£96,437
£94,262
£92,842
£94,693
£95,727
93
93
91
89
87
89
90
£95,624
£94,284
£89,995
£89,381
£89,715
£94,156
£94,241
91
90
86
85
85
90
90
£97,546
£94,088
£93,458
£89,193
£92,437
£92,838
£95,269
89
86
85
82
84
85
87
East of
N.Ireland RPPI
1%
‐1%
‐55%
North of
Northern Ireland
RPPI
100
106
113
117
124
133
146
159
171
187
196
190
171
163
148
136
123
120
118
123
0%
5%
‐54%
3%
2%
‐55%
Source: DFP NI RPPI November 2013
Slide 17

18. Residential Prices in Outer Belfast are the highest
within Northern Ireland and now 52% below 2007 peak
NI Residential Property Price Index & Standardised Price of Properties Sold in each NUTS3 Area
Regional Area
Belfast
Outer Belfast
East of N.Ireland
North of N.Ireland
West & South of N.Ireland
Northern Ireland
Source: DFP NI RPPI November 2013
Index
% Change on
% Change over Q3 2013 relative
(Quarter 3 2013) Previous Quarter
12 months
to Peak
89
96
90
90
87
91
3%
1%
1%
0%
3%
2%
0%
0%
‐1%
5%
2%
1%
‐55%
‐52%
‐55%
‐54%
‐55%
‐54%
Standardised
Price
(Quarter 3 2013)
£93,042
£109,869
£95,727
£94,241
£95,269
£98,612
Slide 18

19. Median, Mean & Standardised Residential Property Prices
Standardised NI Residential Property Price
NI Average Sales Prices Q1 2005 ‐ Q3 2013
Quarter
2005 Q1
2005 Q2
2005 Q3
2005 Q4
2006 Q1
2006 Q2
2006 Q3
2006 Q4
2007 Q1
2007 Q2
2007 Q3
2007 Q4
2008 Q1
2008 Q2
2008 Q3
2008 Q4
2009 Q1
2009 Q2
2009 Q3
2009 Q4
2010 Q1
2010 Q2
2010 Q3
2010 Q4
2011 Q1
2011 Q2
2011 Q3
2011 Q4
2012 Q1
2012 Q2
2012 Q3
2012 Q4
2013 Q1
2013 Q2
2013 Q3
Simple
Mean
Simple
Median
Standardised Price
(RPPI)
£116,293
£120,578
£128,901
£129,618
£133,152
£145,478
£164,159
£179,299
£198,072
£216,870
£234,135
£231,717
£212,124
£188,519
£175,782
£161,613
£146,401
£148,977
£149,475
£151,715
£100,000
£105,500
£115,000
£117,000
£120,000
£130,000
£145,000
£160,000
£175,000
£193,000
£200,000
£192,000
£175,000
£165,000
£152,000
£144,887
£130,000
£132,000
£135,000
£137,500
£108,232
£112,279
£119,173
£122,487
£126,844
£138,208
£153,370
£172,285
£187,603
£205,986
£214,477
£204,284
£186,469
£173,561
£157,767
£143,080
£132,654
£134,772
£135,018
£135,699
£148,220
£142,696
£141,080
£135,204
£127,315
£124,853
£126,082
£121,489
£124,000
£125,000
£125,000
£120,000
£112,000
£112,000
£111,500
£106,000
£132,013
£132,996
£129,887
£123,160
£116,194
£113,130
£111,301
£108,037
£115,648
£112,113
£115,995
£112,194
£110,234
£111,248
£115,316
£100,506
£98,000
£100,000
£96,000
£94,000
£95,000
£100,500
£100,483
£99,674
£97,708
£95,295
£94,951
£97,029
£98,612
Source: DFP NI RPPI November 2013
Quarter
2005 Q1
2005 Q2
2005 Q3
2005 Q4
2006 Q1
2006 Q2
2006 Q3
2006 Q4
2007 Q1
2007 Q2
2007 Q3
2007 Q4
2008 Q1
2008 Q2
2008 Q3
2008 Q4
2009 Q1
2009 Q2
2009 Q3
2009 Q4
2010 Q1
2010 Q2
2010 Q3
2010 Q4
2011 Q1
2011 Q2
2011 Q3
2011 Q4
2012 Q1
2012 Q2
2012 Q3
2012 Q4
2013 Q1
2013 Q2
2013 Q3
Detached
SemiDetached
Terraced
Apartment
£161,290
£170,572
£181,064
£184,972
£189,255
£200,370
£221,391
£244,068
£265,663
£306,097
£335,812
£320,385
£292,330
£271,310
£245,225
£223,606
£203,759
£209,928
£206,486
£210,520
£104,899
£110,189
£115,112
£118,977
£122,910
£134,898
£149,205
£167,883
£182,988
£203,650
£208,014
£197,022
£181,197
£173,138
£154,094
£140,210
£127,922
£130,855
£130,432
£131,654
£80,119
£81,157
£88,230
£90,947
£94,749
£106,387
£119,211
£134,462
£150,051
£156,597
£160,908
£154,180
£141,195
£129,025
£119,365
£108,351
£102,031
£100,869
£102,870
£101,666
£98,729
£98,411
£101,414
£103,025
£110,729
£118,297
£128,940
£152,147
£161,794
£177,331
£174,611
£173,420
£161,241
£155,436
£138,056
£119,909
£112,422
£118,291
£117,050
£118,508
£205,648
£205,133
£200,839
£193,483
£186,836
£177,385
£179,511
£176,088
£127,745
£131,028
£127,507
£122,200
£114,618
£114,021
£110,813
£108,450
£94,899
£93,608
£90,546
£84,837
£78,572
£77,433
£74,545
£71,785
£112,095
£112,726
£113,911
£104,701
£100,628
£96,916
£98,356
£92,345
£104,180
£99,860
£99,041
£96,204
£95,430
£96,803
£97,887
£65,609
£67,649
£65,840
£64,242
£62,429
£63,389
£65,588
£84,347
£80,081
£78,233
£78,197
£76,676
£76,718
£77,125
£155,393
£156,103
£151,604
£147,025
£149,583
£154,016
£155,960
Source: DFP NI RPPI November 2013
Slide 19

20. Strabane, Derry & Limavady Council Areas have the
lowest median house prices depending on property type
Median Sale Price of Residential Properties Sold between
October 2012 ‐September 2013 By Property Type & Location
Local
Government
Detached
Semi-Detached
District
£160,000
£105,000
Antrim
£170,500
£103,750
Ards
£124,875
£71,250
Armagh
£135,000
£100,000
Ballymena
£117,500
£73,500
Ballymoney
£139,500
£90,000
Banbridge
£225,000
£116,000
Belfast
£147,500
£105,000
Carrickfergus
£185,000
£125,000
Castlereagh
£133,750
£95,000
Coleraine
£130,000
£86,500
Cookstown
£132,000
£80,000
Craigavon
£147,250
£95,000
Derry
£158,250
£95,000
Down
£121,500
£88,500
Dungannon
£124,750
£81,500
Fermanagh
£134,950
£85,000
Larne
£118,000
£69,500
Limavady
£181,500
£112,000
Lisburn
£132,000
£89,950
Magherafelt
£137,500
£90,000
Moyle
£144,200
£90,000
Newry & Mourne
£154,375
£99,950
Newtownabbey
£185,000
£109,225
North Down
£124,950
£80,000
Omagh
£108,000
£69,000
Strabane
Source: DFP NI RPPI November 2013
Terrace
Apartment
Total
£59,250
£65,000
£46,250
£63,950
£53,000
£61,000
£63,000
£57,000
£76,000
£69,000
£62,000
£49,000
£57,500
£70,000
£64,000
£58,000
£55,000
£47,500
£75,000
£64,000
£91,750
£59,000
£58,750
£85,500
£52,000
£50,750
N/A
£52,000
N/A
£89,950
N/A
£66,000
£80,000
£67,000
£80,000
£120,000
N/A
£62,625
£46,375
£80,564
N/A
£67,500
£62,450
N/A
£70,000
N/A
N/A
£60,850
£62,252
£80,000
N/A
N/A
£105,000
£102,000
£77,000
£105,000
£83,000
£93,000
£85,000
£95,000
£127,975
£115,000
£93,000
£75,500
£83,000
£112,000
£89,375
£90,000
£82,500
£83,625
£121,600
£103,500
£120,000
£95,000
£99,950
£120,000
£90,000
£78,000
Slide 20

21. UK & NI Regional
House Price
Performance
Slide 21

22. According to DCLG survey average house prices are
49% below peak & UK prices are almost twice those of NI
Average House Prices
£
UK
NI
250,000
£245k
225,000
200,000
93%
175,000
150,000
£127k
125,000
49% fall back to mid-2005 levels
**Excludes Auction Sales**
100,000
Source: ONS
75,000
Sep-03
Sep-05
Sep-07
Sep-09
Sep-11
Sep-13
Slide 22

23. Scotland was the only UK region not to post year-onyear growth in Q3 2013
Annual Average House Price Growth - Q3 2013
Y/Y
Scot
NE
NI
Wal
NW
YH
East
SW
WM
EM
SE
UK
Lon
-1.2%
0.4%
3.6%
Source: DCLG
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
Slide 23

24. NI experiences biggest peak-to-trough decline of all UK
regions & has experienced the weakest recovery to date
House Price Recovery - % Rise Relative to Trough
Peak to Trough in UK Regional House Prices
Q3 2013
As at Q3 2013
45%
0%
Source: DCLG
40%
-10%
35%
-13.2%
30%
-20%
25%
-30%
20%
16.3%
15%
-40%
10%
-50%
Source: DCLG
-50.7%
**Mortgages Only Excludes Cash & Auction Sales**
5%
2.6%
0%
-60%
Scot WM
NW
YH
NE
UK
SE
EM
East SW
Wal
Lon
NI
Lon
SE
UK
East SW
Wal
EM
WM Scot NW
YH
NE
Slide 24
NI

25. The UK has recouped all of its house price falls but this is
due to improvements within London & the South East
House Prices Relative to Pre-Downturn Peak
Q3 2013
30%
20%
**Mortgages Only Excludes Cash & Auction Sales**
19.4%
10%
0.9%
0%
-10%
-20%
-30%
-40%
-50%
-49.4%
Source: DCLG
-60%
Lon
SE
UK
East SW
WM
Wal
EM
Scot NW
YH
NE
NI
Slide 25

26. NI’s housing boom & bust followed a different
trajectory to both the US & RoI…..
Housing recoveries underway
% Y/Y
Annual House Price Inflation
65
US
NI
RoI
50
35
20
5
-10
-25
Source: DCLG & S&P / Case-Shiller 20-City House
Price Index, ptsb/ESRI & CSO
-40
Oct-03
Oct-05
Oct-07
Oct-09
Oct-11
Oct-13
Slide 26

27. …..and a very different trajectory from the UK
Annual Average House Price Growth
Y/Y
60%
3 months / year
58.2%
UK
NI
45%
30%
15%
+5.2%
0%
-0.6%
-15%
Source: ONS
-30%
Sep-03
Sep-05
Sep-07
Sep-09
Sep-11
Sep-13
Slide 27

28. …but then again NI bucked the national trend during
the UK’s housing boom & bust of the 1980s & 1990s…
UK's Boom & Bust of the 1980s & early 1990s
House Price Index
Index 2002 = 100
70
UK
65
60
55
NI
UK house price
peak in Q3 1989
50
Almost 8 years for UK
house prices to return to
1989 levels
45
40
35
30
25
Source: DCLG
20
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
Slide 28

29. …the UK’s housing boom & bust of the 1980s & 1990s
was mild relative to the NI variety of the noughties
The UK's Housing Boom,Bust & Recovery (1980s & 1990s)
Index Yr 0 = 100
versus the N.Ireland Experience
350
300
250
Q3 1999
5 years prior to house price peaks
(UK starts at Q3 1984 & NI Q3 2002)
Q3 1995
UK house prices 32.5% above peak in
10yrs & 193% rise in 15yrs
UK average house prices 7% below
peak & 106% above Q3 89
NI peak Q2 07 143% rise in 5yrs
UK peak Q3 89 121% rise in 5yrs
200
UK returns to house price peak in
almost 7.5 years
150
100
50
Q3 2013
50% below peak
23% above Q3 2002
Source: DCLG & UB Calculations
UK (1984 Q3 - 1999 Q3)
Ye
ar
9
Ye
ar
10
Ye
ar
11
Ye
ar
12
Ye
ar
13
Ye
ar
14
Ye
ar
15
Ye
ar
8
Ye
ar
7
Ye
ar
6
Ye
ar
5
Ye
ar
4
Ye
ar
3
Ye
ar
2
Ye
ar
1
Ye
ar
0
0
NI (2002 Q3 - 2013 Q3)
Slide 29

30. Longer-term NI’s relative house prices should track relative
economic prosperity (UK excl. London & the South East)…
Relative Average House Prices
Index
NI v UK (Excluding London & South East)
120
NI below long-term
estimate of 'fair value'
NI = UK ex LSE
100
60
Source: DCLG, ONS & UB
NI's relative economic prosperity
GVA per capita relative to UK ex LSE
NI below UK ex LSE
80
NI above UK ex LSE
140
Feb-02 Oct-03 Jun-05 Feb-07 Oct-08 Jun-10 Feb-12 Oct-13
Slide 30

31. …indeed NI has already returned to the bottom of the
UK regional house price table….
Average House Prices September 2013
£K
450
**Mortgages Only Excludes Cash / Auction Sales**
Average FTB House Prices September 2013
£K
350
**Mortgages Only Excludes Cash / Auction Sales**
Source: ONS
400
Source: ONS
300
350
250
300
200
245k
250
150
192k
200
184k
150
127k
95k
100
100
Lon
SE
East
UK
SW
UK WM Scot
excl
LSE
EM
Y&H NW
Wal
NE
NI
50
Lon
SE
UK
East
SW
WM
EM
Y&H NW Scot Wal
NE
Slide 31
NI

32. …. a far cry from the halcyon days of 2007
£
Average House Prices August 2007
Source: DCLG & permanent TSB/ESRI
400,000
Average FTB House Prices August 2007
£k
Source: DCLG
275
350,000
300,000
225
249k
250,000
189
167
175
219k
203k
200,000
125
150,000
100,000
75
Lon Dub SE
NI East SW UK RoI WM EM Wal Y&H NW Scot NE
Lon
SE
NI
East
SW
UK
WM
EM
Wal Scot NW
NE
Slide 32
Y&H

33. Mortgage Activity /
Housing
Transactions
Slide 33

34. HMRC residential property transactions (Quarterly &
Rolling Annual Sum)
Northern Ireland Residential Property Transactions
Northern Ireland Residential Property Transactions
4 Quarter Rolling Sum
All Transactions
2005 Q1
2005 Q2
2005 Q3
2005 Q4
2006 Q1
2006 Q2
2006 Q3
2006 Q4
2007 Q1
2007 Q2
2007 Q3
2007 Q4
2008 Q1
2008 Q2
2008 Q3
2008 Q4
2009 Q1
2009 Q2
2009 Q3
2009 Q4
2010 Q1
2010 Q2
2010 Q3
2010 Q4
2011 Q1
2011 Q2
2011 Q3
2011 Q4
2012 Q1
2012 Q2
2012 Q3
2012 Q4
2013 Q1
2013 Q2
2013 Q3
Q/Q Change
Y/Y Change
Last 4 Quarters
Detached
Semi‐Detached
Terraced
Apartments
3,010
8,055
8,500
9,667
8,694
10,889
10,901
10,903
8,749
9,378
6,829
4,330
3,039
3,347
2,272
2,255
2,015
2,846
3,262
3,600
2,538
2,712
2,719
2,819
2,418
2,627
3,216
3,085
3,196
3,136
3,574
3,778
3,396
3,744
4,001
829
2,240
2,314
2,515
2,221
2,851
2,996
2,787
2,212
2,338
1,935
1,162
788
824
609
620
536
737
871
999
650
744
712
828
664
766
964
900
947
902
1,122
1,177
1,015
1,149
1,272
917
2,502
2,675
3,018
2,676
3,259
3,146
3,149
2,482
2,706
1,893
1,226
884
1,036
691
722
674
1,027
1,126
1,243
807
928
909
845
774
812
1,029
989
975
979
1,141
1,157
1,059
1,160
1,206
1,062
2,828
2,970
3,511
3,208
3,907
3,910
4,098
3,363
3,599
2,476
1,516
1,128
1,166
796
746
628
851
1,036
1,106
859
852
964
938
820
818
952
933
1,024
992
1,035
1,178
1,051
1,201
1,241
202
485
541
623
589
872
849
869
692
735
525
426
239
321
176
167
177
231
229
252
222
188
134
208
160
231
271
263
250
263
276
266
271
234
282
11%
13%
4,613
4%
6%
4,582
3%
20%
4,671
21%
2%
1,053
7%
12%
14,919
Source: DFP NI RPPI November 2013
All Transactions
2005 Q4
2006 Q1
2006 Q2
2006 Q3
2006 Q4
2007 Q1
2007 Q2
2007 Q3
2007 Q4
2008 Q1
2008 Q2
2008 Q3
2008 Q4
2009 Q1
2009 Q2
2009 Q3
2009 Q4
2010 Q1
2010 Q2
2010 Q3
2010 Q4
2011 Q1
2011 Q2
2011 Q3
2011 Q4
2012 Q1
2012 Q2
2012 Q3
2012 Q4
2013 Q1
2013 Q2
2013 Q3
Q/Q Change
Y/Y Change
2013 Q3 v Peak
Rise from Low
Detached
Semi‐Detached
Terraced
Apartments
29,232
34,916
37,750
40,151
41,387
41,442
39,931
35,859
29,286
23,576
17,545
12,988
10,913
9,889
9,388
10,378
11,723
12,246
12,112
11,569
10,788
10,668
10,583
11,080
11,346
12,124
12,633
12,991
13,684
13,884
14,492
14,919
7,898
9,290
9,901
10,583
10,855
10,846
10,333
9,272
7,647
6,223
4,709
3,383
2,841
2,589
2,502
2,764
3,143
3,257
3,264
3,105
2,934
2,948
2,970
3,222
3,294
3,577
3,713
3,871
4,148
4,216
4,463
4,613
9,112
10,871
11,628
12,099
12,230
12,036
11,483
10,230
8,307
6,709
5,039
3,837
3,333
3,123
3,114
3,549
4,070
4,203
4,104
3,887
3,489
3,456
3,340
3,460
3,604
3,805
3,972
4,084
4,252
4,336
4,517
4,582
10,371
12,517
13,596
14,536
15,123
15,278
14,970
13,536
10,954
8,719
6,286
4,606
3,836
3,336
3,021
3,261
3,621
3,852
3,853
3,781
3,613
3,574
3,540
3,528
3,523
3,727
3,901
3,984
4,229
4,256
4,465
4,671
1,851
2,238
2,625
2,933
3,179
3,282
3,145
2,821
2,378
1,925
1,511
1,162
903
841
751
804
889
934
891
796
752
690
733
870
925
1,015
1,047
1,052
1,055
1,076
1,047
1,053
3%
19%
‐58%
84%
1%
12%
‐63%
47%
5%
17%
‐69%
55%
1%
0%
‐68%
53%
3%
15%
‐64%
59%
Source: DFP NI RPPI November 2013
Slide 34

35. Property transactions in Q3 2013 hits highest level since
Q4 2007, due to pick-up in cash sales & mortgages
Northern Ireland Mortgages (CML) & Residential Property
Transactions* (RPT): Quarterly
14000
Source: CML & DFP / HMRC Residential Property Transactions, * Includes cash sales
12000
10000
The larger the difference between
the two was largely an indication of
non-CML mortgages & cash sales.
Now it is almost entirely due to cash
sales
8000
6000
4000
2000
0
2005 Q3 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3 2013 Q3
CML Mortgages
DFP / HMRC Residential Property Transactions
Slide 35

36. NI mortgage activity increases by 22% q/q in Q3
Q/Q
NI Mortgages (CML) & Residential Property Transactions
(RPT): Quarterly Growth
60%
CML
DFP/HMRC RPT
45%
30%
21.7%
15%
6.9%
0%
-15%
-30%
-45%
Source: CML & DFP / HMRC Residential Property Transactions (RPT include cash sales)
-60%
2005 Q3 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3 2013 Q3
Slide 36

37. Mortgage activity up 22% y/y in Q3 & overall transactions
up 12% y/y (difference due to rise in auction / cash sales)
Y/Y
NI Mortgages (CML) & Residential Property Transactions
(RPT): Y/Y Growth
75%
CML
60%
DFP/HMRC RPT
45%
30%
21.7%
15%
11.9%
0%
-15%
-30%
-45%
-60%
-75%
Source: CML & DFP / HMRC Residential Property Transactions (RPT Include cash sales)
-90%
2006 Q3
2007 Q3
2008 Q3
2009 Q3
2010 Q3
2011 Q3
2012 Q3
2013 Q3
Slide 37

38. 9,500 NI mortgages for house purchase over the year
to Q3 2013. Up 6% y/y & 23% above 2008 low…
NI Mortgage Activity
000s
40
NI Mortgage Activity
Y/Y% Growth
All Loans for House Purchase
All Loans for House Purchase Annual % Growth
60%
Source: CML, *4 Quarters to Q3 2013 Q3
35
40%
30
25
20%
No data available
5.6%
20
0%
15
9.5
10
5
-20%
-40%
Source: CML, *4 Quarters to Q3 2013 Q3
-
-57.2%
*
13
1978
1983
1988
1993
1998
2003
2008
20
10
20
07
20
04
20
01
20
98
19
95
19
92
19
89
19
86
19
83
19
80
19
77
19
19
74
-60%
Slide 38
2013*

39. …first-time buyer market posts a larger rise with 5,600
loans in the 4 quarters to Q3 2013. 93% above 2008 low…
NI Mortgage Activity
000s
25
NI Mortgage Activity
Y/Y% Growth
Loans for First-Time Buyers Only
Loans for First-Time Buyers Annual % Growth
80%
Source: CML, *4 Quarters to Q3 2013 Q3
60%
20
40%
15
No data available
20%
10
9.8%
0%
5.6
5
-20%
-40%
Source: CML, *4 Quarters to Q3 2013 Q3
-
-49.1%
*
13
20
10
20
07
20
04
20
01
20
98
19
95
19
92
19
89
19
86
19
83
19
80
19
77
19
19
74
-60%
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
Slide 39
2013*

40. …while second hand market (‘Home Movers’) still
experiencing weakest activity since 1974…
NI Mortgage Activity
000s
NI Mortgage Activity
Loans for Home Movers
25
Y/Y% Growth
Loans for Home-Movers Annual % Growth
Source: CML, *4 Quarters to Q3 2013 Q3
50%
20
30%
15
10%
No data available
-2.6%
-10%
10
-30%
5
3.8
-50%
Source: CML, *4 Quarters to Q3 2013 Q3
-60.5%
1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013*
-70%
1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013*
Slide 40

41. …NI’s recovery within the mortgage market
continues to lag the UK
Mortgage Activity
Y/Y
45%
NI
Mortgage Activity
Y/Y
Loans for Home-Movers % Y/Y Growth
Loans for First-Time Buyers % Y/Y Growth
75%
UK
NI
30%
15%
45%
0%
UK
60%
30%
15%
-15%
0%
-30%
-15%
-45%
-30%
-60%
-45%
Source: CML, *4 Quarters to Q3 2013 Q3
Source: CML, *4 Quarters to Q3 2013 Q3
-60%
-75%
2001
2003
2005
2007
2009
2011
2013*
2001
2003
2005
2007
2009
2011
Slide 41
2013*

42. Residential property transactions up 15% y/y in Q3 2013 but
volumes over the year to Q3 are 64% below 2006 levels
NI Residential Property Transactions
All NI Residential Property Transactions
Rolling 4 Quarter Sum
Quarterly
12,000
Includes Auction Sales
50,000
**Includes Auction Sales**
Source: DFP RPPI
41,442
40,000
10,000
8,000
64% below
peak but 59%
above low
30,000
6,000
20,000
4,000
10,000
2,000
14,919
Source: DFP
9,388
-
-
2005 Q3
2007 Q3
2009 Q3
2011 Q3
2013 Q3
2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3 2013 Q3
Slide 42

43. The value of NI’s property transactions has fallen by
£5.7bn (80%) relative to peak
Value of NI's Residential Property Transactions
(Transactions x Standardised Price)
Quarterly £Bn
2.5
Quarterly Left Axis
Annual Right Axis
Annual £Bn
8
Source: DFP NI RPPI
£7.1bn
7
80%
fall
2.0
6
5
1.5
4
1.0
£1.44bn
3
2
0.5
1
0.0
2006 Q3
0
2008 Q2
2010 Q1
2011 Q4
2013 Q3
Slide 43

44. …with the FTB market accounting for almost 60% of all
NI mortgage activity – its highest share since 2001
First-Time Buyer Share of the Market
80%
NI
UK
70%
58.9%
60%
50%
43.5%
40%
30%
Source: CML, *4 Quarters to Q3 2013 Q3
20%
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010 2013*
Slide 44

45. The number of NI remortgages has plummeted as well
NI Remortgages - Number of Loans
Quarterly K
10
32.9K
Source: CML
9
Annual K
35
86%
decline
8
30
25
7
6
20
5
15
4
3
4.7K
10
2
5
1
0
0
2005
Q2
2006
Q1
2006
Q4
2007
Q3
2008
Q2
2009
Q1
Quarterly (Left Hand Side)
2009
Q4
2010
Q3
2011
Q2
2012
Q1
2012
Q4
2013
Q3
Rolling Annual Total (Right Hand Side)
Slide 45

46. …with the UK remortgage market not faring much better
Remortgage Activity Levels Levels
% Y/Y Growth
30%
140
NI
Remortgage Activity
Y/Y
2006 = 100 Rolling 4 Quarter Total
NI
UK
120
15%
100
0%
80
-15%
60
UK
-30%
40
-73% below
2006 levels
20
0
2006 Q3
-84% below
2006 levels
2007 Q3
2008 Q3
2009 Q3
2010 Q3
2011 Q3
2012 Q3
2013 Q3
-45%
-60%
Source: CML, *4 Quarters to Q3 2013 Q3
-75%
2007
2008
2009
2010
2011
2012
2013*
Slide 46

47. New house sales in NI still following a downward
trajectory with sales 84% below 2006 levels…
NI New House Sales
Rolling Annual Sum
8000
Pre-crisis average
6000
4000
84% below
peak
2000
Source: DSD / NHBC
0
2005 Q2
2007 Q2
2009 Q2
2011 Q2
2013 Q2
Slide 47

48. …property legacy explains why NI’s Business Services
& Finance output is some 51% below its Q4 2006 peak…
NI Business Services & Finance Output Levels
Index 2010 = 100
160
NI
UK
145
51%
below
peak
130
115
0.3% below
pre-downturn peak
100
85
70
Source: DFP Index of Services & ONS
55
2004 Q2
2005 Q4
2007 Q2
2008 Q4
2010 Q2
2011 Q4
2013 Q2
Slide 48

49. …the rise of remortgaging was accompanied by a rise in
housing equity withdrawal for spending on 2nd homes….
UK Housing Equity Withdrawal
£Bn
20
HEW in £m
%
10
HEW as a % of post-tax income
8
15
6
10
4
5
2
0
0
-5
-2
-10
-4
-15
-6
Source: BoE
-8
-20
Jun-99
Jun-01
Jun-03
Jun-05
Jun-07
Jun-09
Jun-11
Jun-13
Slide 49

50. …or a new car. Decreases in remortgaging / equity
withdrawal is one factor behind decline in new car sales
17,143 fewer NI new car sales relative to 2007 peak
New Car Registrations
12 Month Rolling Sum
Index
70,000
Indexed 2007 =100
120
80,000
Sales now
26% below
peak
68,708
NI
Scotland
Wales
UK
RoI
Pre-Recession Peak
+1%
100
-7%
80
60,000
-25%
57,170
60
50,000
51,565
47,580
40
Temporary reduction in VAT
rate to 15% & 'Cash for
Clunkers'
40,000
-60%
20
Source: SMMT
Source: SMMT & SIMI
30,000
Oct-07
Oct-08
Oct-09
Oct-10
Oct-11
Oct-12
Oct-13
0
Dec-07
Feb-09
Apr-10
Jun-11
Aug-12
Slide 50
Oct-13

51. Levels of mortgage activity in both the UK & NI
remain well below 2006 (pre-crisis) levels…
NI & UK Mortgage Activity Levels:First-Time Buyers
NI & UK Mortgage Activity Levels: All Loans
2006 =100 Rolling 4 Quarter Total
2006 =100 Rolling 4 Quarter Total
120
120
NI
NI
UK
100
100
80
UK
80
48% below
2006 levels
60
40
37% below
2006 levels
60
40% below
2006 levels
40
65% below
2006 levels
20
Source: CML
0
2006 Q3
2007 Q3
20
Source: CML
2008 Q3
2009 Q3
2010 Q3
2011 Q3
2012 Q3
2013 Q3
0
2006 Q3
2007 Q3
2008 Q3
2009 Q3
2010 Q3
2011 Q3
2012 Q3
Slide 51
2013 Q3

52. … the ‘Home Movers’ segment remains virtually stagnant. FTBs
more likely to go for new builds rather than 2nd hand dwellings
NI & UK Mortgage Activity Levels: Home-Movers
Mortgage Activity (Home Movers) 2013 Q3*
2006 = 100 Rolling 4 Quarter Total
Relative to Pre-Credit Crunch Levels (2006)
120
NI
40%
UK
Source: CML, * 4 Quarters to 2013 Q3
100
20%
80
0%
60
54% below
2006 levels
-20%
-40%
40
-60%
20
78% below
2006 levels
Source: CML
0
2006 Q3
-80%
NI
2007 Q3
2008 Q3
2009 Q3
2010 Q3
2011 Q3
2012 Q3
2013 Q3
UK
-100%
Peak to Trough
Decline
Recovery From
Trough
Net Position
Slide 52

53. NI posted steeper decline & stronger recovery than
UK in FTB market but their net position is similar
First-Time Buyer Mortgage Activity 2013 Q3*
Mortgage Activity (All Loans) 2013 Q3*
Relative to Pre-Credit Crunch Levels (2006)
Relative to Pre-Credit Crunch Levels (2006)
100%
60%
Source: CML, * 4 Quarters to 2013 Q3
Source: CML, * 4 Quarters to 2012 Q3
75%
40%
50%
20%
25%
0%
0%
-20%
-25%
-40%
-50%
-60%
NI
-75%
UK
-80%
NI
Peak to Trough
Decline
Recovery From
Trough
Net Position
UK
-100%
Peak to Trough
Decline
Recovery From
Trough
Net Position
Slide 53

54. Within Northern Ireland the Home Mover & Remortgage
markets have fallen the most
N.Ireland Mortgage & Remortgage Activity Levels
2006 = 100 Rolling 4 Quarter Total
140
All Mortgages
First-Time Buyers
Home Movers
Remortgages
120
100
80
-40%
60
40
20
-65%
-68%
Source: CML
0
2006 Q3
2007 Q3
-86%
from peak
2008 Q3
2009 Q3
2010 Q3
2011 Q3
2012 Q3
2013 Q3
Slide 54

55. Residential property transactions (mortgages & cash
sales) down 64% relative to 2006 levels
NI Residential Property Transactions* Levels
2006 = 100 Rolling 4 Quarter Total
140
All Mortgages
Remortgages
Property Transactions RPPI
120
100
80
60
-64%
-65%
40
20
Source: CML & DFP/HMRC Residential Property Transactions (RPT), * Includes cash sales
0
2006 Q3
2007 Q3
2008 Q3
2009 Q3
2010 Q3
2011 Q3
-84% below 2006 & 86%
below peak
2012 Q3
2013 Q3
Slide 55

56. Comparison between CML & HMRC property transactions
suggests 30% of transactions are cash sales
000s
50
Northern Ireland Mortgages & Property Transactions*
Rolling 4 Quarter Total
Mortgages CML
40
DFP / HMRC Residential Property Transactions (RPT)
Difference between two is
an indication of cash
sales & mortgage
providers not in CML
Difference between
two is now a good
indication of cash
sales
30
20
10
Source: CML & DFP / HMRC Residential Property Transactions* (RPT includes mortgages & cash sales)
0
2005 Q3 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3 2013 Q3
Slide 56

57. Over 1/3rd of mortgages advanced since 2005 in
Northern Ireland were in negative equity in 2012
Residential Housing Negative Equity
%
Change in Residential Housing Negative Equity
% of mortgages advanced since 2005 in negative equity
% Point Change
40%
% Point Change between Oct 2012 & Aug 2011 CML studies
8
Source: CML, October 2012
35%
35%
+7pp
6
4
30%
2
25%
0
20%
-2
15%
-4
-4pp
-6
10%
10%
-8
5%
-10
0%
Source: CML, based on % of mortgages advanced since 2005 in negative equity
-12
SE
SW
Lon East WM
EM
UK
Scot
NE
Wal
NW Y&H
NI
NE
Y&H
EM
Lon
WM
UK
NW
SE
SW
East Scot
Slide 57
Wal
NI

58. According to some estimates between 20-25% of all
mortgage holders are in negative equity in N.Ireland
Negative equity affected 10.5% of UK
mortgage holders in the mid-1990s and was
geographically concentrated in the southern
regions of the UK. Today, negative equity is
more prevalent in the northern UK regions. NI
is the negative equity black spot in the UK.
Source: FCA Risk Outlook 2013 Negative equity assessment made in January 2013
Slide 58

59. Writs & summonses in respect of mortgages &
mortgage possession orders remain at elevated levels
NI Mortgage Possession Orders
NI Mortgage Arrears
Rolling Annual Average
(Writs & Originating Sumonses in respect of mortgages)
5000
BoE Base Rate
at Record Low
UK Recession
3,905
4000
3,738
2500
**Not all writs & originating summonses (Actions for Mortgage Possession)
or possession orders lead to eviction or re/possession**
2,216
2,136
2000
3000
1500
2000
1000
1000
500
Source: NI Courts Service, * 4Quarters to Q3 2013
Source: NI Courts Service
0
0
1981
1985
1989
1993
1997
2001
2005
2009
2013*
2004Q3
2006Q1
2007Q3
2009Q1
2010Q3
2012Q1
Slide 59
2013Q3

60. Consumer stress will remain a major issue with the two
legacies of unemployment and debt still to unwind…
NI Consumer Stress
NI Unemployment Claimant Count Levels
Rolling 4 Quarter Total
5,000
Personal Insolvencies
Actions for Mortgage Possession
4,500
140,000
Mortgage Possession Orders
Oct 2013
64,900 at
mid-1997 levels
120,000
4,000
3,738
Credit Crunch
begins Aug 07
100,000
3,500
3,000
3,203
80,000
2,500
60,000
2,000
61,000
2,136
1,500
Good Friday
Agreement signed
April 1998
57,900
40,000
1,000
**Not all writs & originating summonses (Actions
for Mortgage Possession) lead to eviction or
re/possession**
500
Source: DFP
Source: DETI Insolvency Service & NI Courts Service
0
2004Q3
2006Q1
2007Q3
2009Q1
20,000
2010Q3
2012Q1
2013Q3
Record low
Aug 07
23,600
0
Oct-86 Oct-89 Oct-92 Oct-95 Oct-98 Oct-01 Oct-04 Oct-07 Oct-10 Oct-13
Slide 60

61. …although employment growth (including full-time
employment) has returned…
NI Employee Jobs
Q/Q % Change
Excludes Self-Employed
1.0%
Q/Q
0.8%
Y/Y
Discontinuity in Series
Y/Y % Change
3%
1%
0.2%
Full-Time & Part-Time Employee Jobs
10%
Full-Time
2%
0.6%
0.4%
NI Annual Employment Growth
Y/Y
0%
0.0%
8%
Part-Time
Total
Part-time employment growing at a much
faster rate than full-time employment
6%
Recovery in PartTime jobs
4%
2%
-0.2%
-1%
-0.4%
-2%
0%
-0.6%
-0.8%
-3%
Source: DFP
-1.0%
Q4 2006 Q4 2007 Q4 2008
-4%
Q2 2010 Q2 2011 Q2 2012 Q2 2013
-2%
Full-time employment fell at a much
faster rate than part-time
-4%
Source: DFP, Figures are not seasonally adjusted
-6%
Jun-93
Dec-95
Jun-98
Dec-00
Jun-03
Dec-05
Jun-08
Dec-10
Jun-13
Slide 61

62. …unemployment has been falling but for the under 25s
(the first-time buyers of tomorrow) it remains a big problem
ILO Unemployment Rates by Age-Group
NI unemployment falling
M/M
5,000
July-September 2013
Claimant Count Monthly Change
30%
Source: DFP
4,000
25%
Nov
2008
+3,200
3,000
20%
2,000
15%
1,000
-3,900
10%
0
5%
-1,000
Source: DFP
0%
-2,000
Apr-07
May-08
Jun-09
Jul-10
Aug-11
Sep-12
Oct-13
18-24
25-49
50+
Age Category
16+
Slide 62

63. Student debt will affect FTB affordability. Over 109,000
borrowers with £1.2bn of outstanding student debt
Income Contingent Repayments for NI Domiciled
Students Studying in Higher Education in UK & EU
Borrowers (000s)
120
No.of Borrowers with Outstanding Debt (000s)
Debt (£bn)
1.4
Amount of Outstanding Debt (£bn)
1.2
100
80
Average debt for NI domiciled students
leaving HE in 2012 was £15,690.
*Not all of these students will remain in
or return to Northern Ireland*
1
0.8
60
0.6
40
0.4
20
0.2
Source: The Student Loans Company 2013
0
0
1999/00
2001/02
2003/04
2005/06
2007/08
2009/10
2011/12
Slide 63

64. Housing Starts /
Housing
Completions
Slide 64

65. Housing starts were still falling in 2012 but expected to
bottom-out in 2013…
NI House Starts
Rolling Annual Sum
20000
NHBC
Non-NHBC
16000
12000
2006
2007
2008
2009
2010
2011
2012
2013
NHBC
8,600
7,500
3,100
3,500
3,200
2,000
1,700
1,900*
Total
15,260
13,000
7,380
7,480
7,830
6,490
6,180
5,940**
* 4 quarters to Q3 2013
**4 quarters to Q2 2013
8000
4000
Source: DSD & NHBC,NHBC now account for <30% of total NI private sector activity
0
2004Q3
2005Q4
2007Q1
2008Q2
2009Q3
2010Q4
2012Q1
2013Q2
Slide 65

66. …as the most recent data signals an upward trajectory
Annual Growth in NI Housing Starts
Y/Y
150%
All Starts
NHBC
100%
50%
0%
-50%
Source: DSD & NHBC, * NHBC now account for <30% of total private sector NI activity
-100%
2004Q3
2006Q1
2007Q3
2009Q1
2010Q3
2012Q1
2013Q3
Slide 66

67. Over the last 6/7 years housing starts in Northern
Ireland have fallen further than elsewhere in the UK …
Housing Starts
Rolling Annual Sum 2006=100
Index 2006=100
125
UK
Wales
Scotland
NI
England
100
Q2 2013
40% below peak
Q1 2013
46% below peak
Q2 2013
46% below
peak
75
Q1 2013
56% below
peak
50
25
Q2 2013
61% below peak
Source: DSD & DCLG
0
2006 Q3
2007 Q3
2008 Q3
2009 Q3
2010 Q3
2011 Q3
2012 Q3
2013 Q3
Slide 67

68. … but not as bad as the Republic of Ireland
Housing Starts
Index 2006=100
Rolling Annual Sum 2006=100
125
UK
NI
RoI
100
75
Q1 2013 46%
below peak
50
Q2 2013 61%
below peak
25
Q3 2013 94%
below peak
Source: DSD, DCLG & DoE
0
2006 Q3
2007 Q3
2008 Q3
2009 Q3
2010 Q3
2011 Q3
2012 Q3
2013 Q3
Slide 68

69. NI & UK have experienced similar peak-to-trough
declines
Housing Starts
60%
Peak-to-Trough Fall
Recovery from Trough
Net Position
40%
20%
0%
-20%
-40%
-60%
-80%
Source: DSD, DCLG & CSO, NI as of Q2 2013, Eng Q2
13, Wal Q2 13, Scot Q1 13, UK Q1 13 & RoI Q3 13
-100%
UK
England
Scotland
Wales
NI
RoI
Slide 69

70. The RoI has experienced the steepest decline in housing
starts with England posting the strongest recovery
Housing Starts
Peak-To-Trough*
Recovery-from-Trough
Net Position**
UK (as of Q1 2013)
‐56.8%
25.3%
‐45.8%
England (as of Q2 2013)
‐59.0%
46.5%
‐39.9%
Scotland (as of Q1 2013)
‐56.5%
1.4%
‐55.9%
Wales (as of Q2 2013)
‐58.8%
30.8%
‐46.2%
Northern Ireland (as of Q2 2013)
Republic of Ireland (as of Q3 2013)
‐64.7%
10.2%
‐61.1%
‐95.0%
11.5%
‐94.4%
Source: DSD & DCLG, *pre‐recession peak to trough over a 4 quarter period, ** latest position (last 4 quarters) relative to pre‐recession peak
Slide 70

71. Annual rate of growth in house completions hits 52% in
Q2 2013 with NHBC signalling a flat reading in Q3 2013…
Annual Growth in NI Housing Completions
Y/Y
80%
All NI Completions
NHBC Completions
60%
40%
20%
0%
-20%
-40%
Source: DSD & NHBC,NHBC now accounted for just 30% of total NI private sector activity
-60%
2004Q3
2006Q1
2007Q3
2009Q1
2010Q3
2012Q1
2013Q3
Slide 71

72. …. 2013 should emerge as the 2nd successive year of
growth following 5 years of contraction
NI House Completions
Rolling Annual Sum
20,000
NHBC
Non-NHBC
16,000
12,000
2006
2007
2008
2009
2010
2011
2012
2013
NHBC
10,200
8,000
5,400
4,600
3,500
2,700
2,200
2,100**
Total
17,965
14,510
10,800
9,430
8,040
6,970
7,920
8,713*
* Last 4 quarters to Q2 2013
** Last 4 quarters to Q3 2013
8,000
4,000
Source: DSD & NHBC, * NHBC now accounts for only 25% of total private sector NI activity
0
2004Q3
2006Q1
2007Q3
2009Q1
2010Q3
2012Q1
2013Q3
Slide 72

73. NI has witnessed steeper declines than elsewhere
Housing Completions
Rolling Annual Sum 2006=100
Index 2006=100
125
Source: DSD & DCLG
100
Q2 2013
40% below peak
75
46%
below peak
50
46%
below peak
52%
below peak
25
Wales
Scotland
NI
England
0
2006 Q3
2007 Q3
2008 Q3
2009 Q3
2010 Q3
2011 Q3
2012 Q3
2013 Q3
Slide 73

74. … but not as bad as the Republic of Ireland
Housing Completions
Index 2006=100
Rolling Annual Sum 2006=100
125
UK
NI
RoI
100
Q1 2013 40%
below peak
75
50
Q2 2013
52% below peak
Q2 2013
91% below peak
25
Source: DSD, DCLG & DoE
0
2006 Q3
2007 Q3
2008 Q3
2009 Q3
2010 Q3
2011 Q3
2012 Q3
2013 Q3
Slide 74

75. RoI house completions remain 91% below their pre-crisis
peak which compares with 52% & 40% for NI & the UK
House Completions
Peak-to-Trough Fall
Recovery from Trough
Net Position
40%
20%
0%
-20%
-40%
-60%
-80%
Source: DSD, DCLG & CSO, NI as of Q2 2013, Eng Q2
13, Wal Q2 13, Scot Q1 13, UK Q1 13 & RoI Q3 13
-100%
UK
England
Scotland
Wales
NI
RoI
Slide 75

76. RoI & NI house-building sectors have experienced steepest
declines to date. But NI has shown some recovery
Housing Completions
Peak-To-Trough*
UK (as of Q1 2013)
England (as of Q2 2013)
Scotland (as of Q1 2013)
Wales (as of Q2 2013)
Northern Ireland (as of Q2 2013)
Republic of Ireland (as of Q3 2013)
Recovery-from-Trough
Net Position**
‐40.3%
0.0%
‐40.3%
‐39.6%
0.0%
‐39.6%
‐46.5%
0.0%
‐46.5%
‐45.6%
0.0%
‐45.6%
‐66.1%
31.5%
‐51.5%
‐91.3%
0.0%
‐91.3%
Source: DSD, DCLG & DoE, *pre‐recession peak to trough over a 4 quarter period, ** latest position (last 4 quarters) relative to pre‐recession peak
Slide 76

77. House completions increased in 2012 & 2013 from 2011
low. Rise linked to completion of unfinished stock
NI Housing Completions
20,000
Total Completions
16,000
Projected Need*
25 year Average
1998-2015
12,200
2008-2025
11,200
12,000
8,000
4,000
Source: DSD & UB Forecasts, * refers to official projections from published sources
0
1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013f
Slide 77

78. …but spare a thought for the RoI. Northern Ireland does
not have the same overhang of stock as the RoI…
Republic of Ireland Housing Completions
100,000
Source: DoE & UB Forecasts
91%
fall
80,000
60,000
40,000
20,000
7.5k 9k
0
1971
1977
1983
1989
1995
2001
2007
2013(f)
Slide 78

79. …but NI is still building fewer houses per capita than it
was back in 1960…longer-term implications??
NI Housing Completions per 1,000 Population
12
2006
10.3
Source: DSD, NISRA & UB Calculations
10
8
6
2013
2011 4.7
3.8
4
2
3
20
1
0
20
1
7
20
0
4
20
0
1
20
0
8
19
9
5
19
9
2
19
9
9
19
8
6
19
8
3
19
8
0
19
8
7
19
7
4
19
7
19
7
1
0
Slide 79

80. The Republic of Ireland is building even fewer houses
per capita as it has an overhang of excess supply
RoI House Completions per 1,000 pop
25
Source: DoE / UB
20.9
20
15
10
5
1.6
0
1971
1977
1983
1989
1995
2001
2007
2013(f)
Slide 80

81. Despite the slump in house building, NI is building at three
times the rate of the RoI & twice the rate of the UK
House Completions per 1,000 Population
25
UK
20
NI
RoI
20.9
RoI was building at twice the rate of NI
which was building at close three times the
rate of the UK
15
10.3
10
5
4.7
2.2
3.7
Source: DSD, ONS, DoE, CSO & UB Calculations
1.6
19
71
19
73
19
75
19
77
19
79
19
81
19
83
19
85
19
87
19
89
19
91
19
93
19
95
19
97
19
99
20
01
20
03
20
05
20
07
20
09
20
11
20
13
0
Slide 81

82. Housing
Affordability /
Interest Rates
Slide 82

83. Regional house prices are a function of supply & demand
dynamics. But fundamentals such as wages are key
Median Gross Weekly Earnings 2013
Median Gross Annual Earnings 2013
£
£ per wk
All Employees Full-Time
35,000
All Employees Full-Time
700
Source: DFP & ONS ASHE
Source: DFP ASHE
32,500
650
30,000
600
27,500
27,017
550
517.5
25,000
23,904
500
460
22,500
450
20,000
400
Lon
SE East UK Scot SW
EM WM NW Y&H Wal
NE
NI
Lon
SE
UK
Scot East WM NW
SW Y&H EM
Wal
NE
Slide 83
NI

84. In NI, the rate of inflation has outpaced earnings growth
for most individuals
% Change in N.Ireland Median Wages v UK Inflation
Cumulative Increase 2007-2013*
30%
Source: DFP ASHE & ONS, * April each year
25%
20%
15%
10%
5%
0%
Total
Public Private
All Employees
Total
Public Private
Full-Time Employees Only
CPI
RPI
Inflation
Slide 84

85. After inflation the median private sector wage has fallen
by almost 20% in real terms (after CPI inflation)
% Change in N.Ireland Median Wages in Real Terms
Cumulative Increase 2007-2013*
10%
Source: DFP ASHE & ONS, * April each year
5%
0%
-5%
-10%
-15%
-20%
-25%
Total
Public
Private
All Employees (Full-Time & Part-Time)
Total
Public
Private
Full-Time Employees Only
Slide 85

86. Those aged under 30 years of age have median earnings
below the NI average…
NI Annual Median Gross Pay By Age-Group
£000
30
Full-Time Employees 2013
NI Average for all age-groups
Source: DFP ASHE, April 2013
25
20
17.5
15
10
5
0
Age 18-21
Age 22-29
Age 30-39
Age 40-49
Age 50-59
Age 60+
Slide 86

87. … & those under 40 (including the household formation 25-34 yrs
category) have experienced the biggest falls in real earnings
NI Gross Median Wages for Full-Time Employees
Cumulative Change in Real Terms 2007-2013*
0%
-5%
-6.3%
-10%
NI average change for
employees from all age-groups
-15%
-20%
Source: DFP ASHE & ONS, *using CPI inflation in April each year
-25%
Age 18-21
Age 22-29
Age 30-39
Age 40-49
Age 50-59
Age 60+
Slide 87

88. The average incomes of borrowers was £42k in Q3 2013
Average incomes of N.Ireland Mortgage Borrowers
£k
60
Source: ONS, Regulated Mortgage Survey
51k
50
42k
40
38k
32k
30
20
10
New Dwellings
All Dwellings
First-Time Buyers
Former Owner-Occupiers
0
1992 Q3
1995 Q3
1998 Q3
2001 Q3
2004 Q3
2007 Q3
2010 Q3
2013 Q3
Slide 88

89. According to the CML mortgage interest payments as a
% of income are at their lowest levels since Q3 1996
Northern Ireland Mortgage Affordability
Northern Ireland Mortgage Affordability
% of income
30
Median for First-Time Buyer Borrowers
Interest Payments
Median for All Borrowers
% of income
30
Interest Payments
Capital & Interest Payments
Capital & Interest Payments
25
26.2
24.9
25
21.9
18.9
20
20
16.6
17.1
15
15
10
10
10.2
8.4
8.1
5
5
Source: CML
Source: CML
0
1979Q3
8.9
0
1983Q4
1988Q1
1992Q2
1996Q3 2000Q4
2005Q1
2009Q2
2013Q3
1979Q3 1983Q4 1988Q1
1992Q2 1996Q3 2000Q4 2005Q1 2009Q2 2013Q3
Slide 89

90. NI’s HPE ratio has dipped below the pre-boom longterm average (1997-2005) & is back to late 1990s levels…
Halifax House Price to Earnings Ratio
All Houses & All Buyers
10
NI
UK
NI Pre-Boom LTA (1997-2005)
9
8.6
8
7
6
5
4.3
4
3.5
3
3.0
2
1
Source: Halifax, based on gross average annual salary of a male full-time employee
0
1997 Q4
2000 Q1
2002 Q2
2004 Q3
2006 Q4
2009 Q1
2011 Q2
2013 Q3
Slide 90

91. …and NI mortgage payments as a % of disposable
income is lower than at anytime in over 30 years
Mortgage Payments as a % Average Disposable Income
All Houses & All Buyers
%
Source: Halifax
70
65.5
64.1
60
47.7
50
40
27.9
30
20
18.1
16.8
10
NI
UK
NI Pre-Boom Average 1997-2005
0
1984 Q3
1990 Q2
1996 Q1
2001 Q4
2007 Q3
2013Q2
Slide 91

92. NI’s HPE ratio for first-time buyers is in line with the
pre-boom 10-yr average of 3.2…
Nationwide FTB House Price to Earnings Ratio
9
N Ireland
UK
NI Pre-Boom LTA
8
NI 10-Yr Pre-boom Average
8.1
7
6
5.4
5
4.6
4
3.3
3
2
1
Source: Nationwide
0
1984 Q4
1990 Q3
1996 Q2
2002 Q1
2007 Q4
2013 Q3
Slide 92

93. NI FTB affordability index is at Q1 1998 levels
FTB Mortgage Payments as a % of Mean Take Home Pay
80%
NI
UK
NI Pre-Boom LTA
74.8%
70%
60%
55.8%
51.8%
50%
40%
32.6%
30%
20%
23.7%
15.1%
10%
Source: Nationwide
0%
1983 Q2
1989 Q2
1995 Q2
2001 Q2
2007 Q2
2013 Q2
Slide 93

94. …but its not just after tax income that is important.
Income after necessities (food & energy) is important
Index 2005 = 100
225
Mortgage Affordability & CPI (FBTE) Inflation
Halifax Affordability Index
Food, Drink, Tobacco & Energy CPI
Nationwide FTB Affordability Index
No Change
200
42% rise
relative to
house price
peak
175
150
+57%
125
100
-62% below Q2
2007 peak
75
Source: ONS, Halifax & Nationwide (FTB) affordability indices all
rebased 2005=100
-68% below
peak
50
2005 Q3
2007 Q3
2009 Q3
2011 Q3
2013 Q3
Slide 94

95. Between Q2 2007 & December 2013 the price of a tank of
petrol / diesel has risen from £57/58 to £78/83 (35-43% rise)
UK Fuel Prices - Tank* of Petrol / Diesel
£
(*60 Litres)
100
Petrol
Diesel
£88.8
90
Emergency Budget
June 2010
£83.1
80
£78.5
NI House
Price Peak
70
60
50
£51.3
'Credit Crunch'
begins
40
30
Source: ONS
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13
Slide 95

96. Inflation has contributed to income squeeze which in
turn has deferred the deleveraging of household debt…
UK Average Weekly Earnings & CPI Inflation
%
6
Ave Weekly Earnings 3m Y/Y % (Excl. Bonuses)
CPI Y/Y
5
4
3
Income
squeeze
NICE
Decade
2
2.2%
1
Does not include taxes
or changes to benefits
Source: ONS
0.8%
0
Oct-01
Oct-03
Oct-05
Oct-07
Oct-09
Oct-11
Oct-13
Slide 96

97. Since Aug-07 CPI has risen by 21% which compares with
a rise in average earnings of 11%
Cumulative % Change in UK Consumer Prices
since 'Credit Crunch' began (Aug 07 to Oct 13)
70%
Source: ONS, *Average Earnings as of September 2013
60%
50%
40%
30%
21.2%
20%
11.0%
10%
0%
Electricity Transport Transport Hotels & Total CPI Average
Food & Non- Food
Earnings*
Gas & Other Fuels & Services Restaurants
Alcoholic
Fuels Lubricants
Beverages
Slide 97

98. The Bank of England will not keep its bank rate at a
record low forever…
The Bank Rate 1700‐2013
3
Slide 98

99. …record low in 5-yr swap rates has been & gone…
%
UK Base Rate v 3 month Libor v 5Yr Swap
(weekly)
8
7
Rise in swap rates
preceeds base rate hikes
Source: Bloomberg
6
5
4
3
1.87%
2
1
0
Dec-99
Base Rate
Dec-01
3mth Libor
Dec-03
Dec-05
5Yr Swap
Dec-07
Dec-09
Dec-11
Dec-13
Slide 99

100. … the record low in 10-yr swap rates has also been
and gone
UK Base Rate v 3 month Libor v 10Yr Swap
%
8
7
(weekly)
Source: Bloomberg
Rise in swap rates
preceeds base rate hikes
6
5
4
3
2.8%
2
1
0
Dec-01
Base Rate
Dec-03
3mth Libor
Dec-05
10 Yr Swap
Dec-07
Dec-09
Dec-11
Dec-13
Slide 100

101. Average interest rate on 5-yr fixed rate mortgages (75%
LTV) has recently hit a record low. 2-yr fixes also falling
UK Average Mortgage Rates
%
9
Source: BoE
8
7
6
5
4.42
4
4.36
3.37
3
3.15
2
1
Bank Rate Tracker Mortgage
SVR
5-yr Fixed LTV 75%
2-Yr Fixed 90% LTV
0
Jan-01 Jun-02 Nov-03 Apr-05 Sep-06 Feb-08 Jul-09 Dec-10 May-12 Oct-13
Slide 101

102. Demographic Trends
& Projections
Slide 102

103. NI’s household formation group has almost peaked
but is set to fall during the next decade
NI Household Formation Group 25-34 yrs of Age
000s
300
Aged 25-34 years of age (Left Hand Scale)
% of population (Right Hand Scale)
%
16
275
15
250
14
225
13
200
12
175
11
Source: NISRA
150
1971
10
1977 1983
1989 1995
2001 2007
2013 2019
2025 2031
2037
Slide 103

104. No. of individuals in 30s & 40s set to fall & will be outnumbered by those in
50s & 60s by 2030. Will impact on future demand for upsizing / downsizing
Northern Ireland Population Projections
000s
550
Population aged in their 30s & 40s
Population aged in their 50s & 60s
525
500
475
450
425
400
375
Source: NISRA
350
2012
2016
2020
2024
2028
2032
2036
Slide 104

105. The no. of people aged >65 yrs is set to increase by 200k (+68%) over the
next 24 years. How will housing supply adapt to changing demand?
Northern Ireland's Population & Projections
000s
600
Aged <16 years of age
Aged 65+ years of age
500
400
300
200
100
Source: NISRA
0
1971
1977
1983
1989
1995
2001
2007
2013
2019
2025
2031
2037
Slide 105

106. Disclaimer
This document is issued for information purposes only for clients of Ulster Bank Group who are eligible counterparties or professional
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where the required authorisation is not held. Ulster Bank and/or its associates and/or its employees may have a position or engage in
transactions in any of the instruments mentioned.
The information including any opinions expressed and the pricing given, is indicative, and constitute our judgement at time of publication
and are subject to change without notice. The information contained herein should not be construed as advice, and is not intended to be
construed as such. This publication provides only a brief review of the complex issues discussed and readers should not rely on information
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Slide 106