The inflation of house prices in Northern Ireland in the 1970s

Abstract

Official statistics published by the Department of the Environment (London) suggest that during the 1970s Northern Ireland changed from being the cheapest housing region in the United Kingdom to being the most expensive region but one. This article seeks an explanation for this remarkable change. It is argued that to some extent the apparent differences are a statistical distortion, but that it remains true that Northern Ireland has experienced a more rapid rate of house price inflation than the rest of the UK. An econometric model of the Northern Ireland housing market is estimated, the results of which suggest that increased demand, unmatched by increased supply, offers the major explanation. Key importance is attached to the availability of mortgage finance.