Balancing demand and supply

Professor of real estate and urban studies at Ulster University, Martin Haran, discusses the performance of Northern Ireland’s housing market and the growing imbalance between supply and demand.

Martin Haran explains that, at headline level, the Northern Ireland housing market continues to demonstrate resilience. By the end of Q1 2025, the average house price had reached £233,000, representing annual growth of 4.8 per cent; a growth rate significantly higher than the rest of the UK and Ireland.

Pointing to relatively stable mortgage conditions and strong underlying demand, Haran says that “we would deem the market to be well supported”. However, he cautions that this growth must be understood in the context of wider economic uncertainty. “We are in the midst of a geopolitical storm and forecasting future trends remains challenging.”

Affordability

Despite continued price growth, Haran highlights a growing disconnect between house prices and household incomes. Northern Ireland is often described as an “affordable” market in relative terms, with 83 per cent of sales below £300,000. However, this characterisation is becoming increasingly strained.

“Whilst we are continuing to see house price inflation, the capacity of households to pay is becoming a much more significant issue.”

This challenge is not evenly distributed across the region. Haran outlines that some of the strongest price growth has occurred outside Belfast, in areas such as Mid Ulster, Fermanagh, and Causeway Coast and Glens. These patterns reflect changing housing preferences, including increased demand for rural living, partly driven by remote working trends and shifting demographics.

“There is certainly demand in those more rural areas,” he says, adding that cross-border dynamics are also playing a role. In particular, he highlights the impact of demand spilling over from Dublin into areas such as Newry, Mourne and Down, placing additional pressure on local housing stock.

Supply

Haran says: “In 2005, we were building 8,000 more homes than we are building in 2025.” He says that this reflects both structural and capacity constraints within the construction sector, as well as planning-related challenges.

“We are not building enough homes and that is not just in the social housing sector; it is in the private sector as well.

“The consequences of this shortfall are evident in both house prices and rental markets. Limited supply, combined with sustained demand, continues to drive upward pressure, creating a system that is increasingly difficult for many households to access.”

Private rental sector

Haran describes the private rental sector as the area where affordability pressures are most acute. As more people are priced out of homeownership, and social housing provision struggles to meet demand, increasing numbers of households are turning to private renting.

“When I go out and speak to estate agents, they tell me they have got 80 tenants for every listing,” he says, highlighting the scale of demand.

At the same time, the sector itself is contracting. Haran says that a combination of policy, regulation, and market incentives have led to a reduction in available rental stock. “Some landlords have exited the sector entirely, while others have shifted properties into the short-term lets market, attracted by higher potential returns.

“We are seeing a shrinking of the private rental sector and this is further intensifying competition and driving up rents.”

Rising rents

The impact of these dynamics is clearly reflected in rental prices. By the second half of 2025, average rents in Belfast had reached £1,101 per month and rent prices across Northern Ireland had increased by 5.8 per cent over the previous 12-month period.

The proportion of income required to service rent currently stands at 36.4 per cent across the region, rising to 41.7 per cent in Belfast. “If we think that anything above 30 per cent would be deemed unaffordable, we are well above that threshold,” he says.

For lower-income households, the situation is particularly severe. The availability of lower-cost rental properties has declined sharply, with a growing concentration of stock at higher price points. “Access for low-income households is becoming nigh on impossible,” Haran says.

Market variability

Another significant trend is the divergence between house price growth and rental growth. While house prices have followed a relatively stable trajectory, rents have become more volatile, with sharper increases in recent years.

“We are seeing greater spikes within that rental market,” Haran says, attributing this to acute supply constraints and heightened demand. This divergence, he states, is “indicative of deeper structural issues within the housing system”.

The Ulster University professor says that these pressures are likely to persist in the medium term, with factors such as potential interest rate increases, ongoing inflation, and rising energy costs expected to place further strain on household finances.

In addition, demographic challenges such as a rise in single-person households and an ageing population are increasing demand for housing units, even in the absence of the scale of population growth being recorded in Britain and the Republic of Ireland.

Policy response

In response to these challenges, Haran outlines a number of key policy recommendations. Central among these is the need to increase housing supply, although he acknowledges that this is not a straightforward task.

Addressing affordability in the private rented sector will require targeted intervention. Haran advocates for greater regulation and professionalisation, while recognising the potential impact on supply. “We do need a sector that is properly regulated,” he argues, particularly in terms of housing quality and tenant protection.

Expanding social housing provision is another critical component, alongside measures to support first-time buyers. Haran suggests that mortgage providers could also play a greater role in facilitating access, particularly through innovative and green-focused mortgage products.

Finally, he emphasises the importance of aligning housing development with infrastructure planning. “It needs to be proactive,” he says, highlighting the need for coordinated approaches that integrate housing, utilities, and wider infrastructure systems.

Concluding, Haran says: “The demand for product considerably outstrips supply and without sustained and coordinated action, affordability challenges, particularly within the private rented sector, will continue to intensify.”