Peace comes at a good price

The ceasefire in Northern Ireland has meant property prices rising by as much as 25 per cent in the past year, says Amanda Seidl

When Bill Cargo's job took him back to Northern Ireland after 10 years in London, he looked forward to trading in his small London property for a spacious house in a leafy Belfast suburb. When he started his search last year, his London home was valued at pounds 169,950, a price that seemed more than adequate to secure an attractive house in the most sought-after area of south Belfast.

Last month Mr Cargo exchanged contracts on the new home he and his fiancee, Sue Randal, are buying in Belfast. The couple were outbid on two other properties. At pounds 183,000 the four-bedroom Fifties house is hardly the bargain they had hoped for. Meanwhile, back in London, Mr Cargo's former home remains unsold at the reduced price of pounds 139,000.

"You do tend to think that you can come over here and buy a fantastic, large place for not very much, but that is not the case any more,'' comments Mr Cargo ruefully.

Northern Ireland is in the grip of a property boom, fuelled by a new confidence in the region following the ceasefire last year. House prices rose by 15 per cent last year according to official statistics, and by as much as 25 per cent in parts of Belfast and North Down, where family houses now cost the same as a house in suburban London.

"Over the last two years we have had the greatest increase in house prices of anywhere in the UK,'' explains Beth Templeton, of estate agents Templeton Robinson.

The reasons for the strength of demand are not entirely clear. The region's economic health remains precarious, but low interest rates and the peace process have inspired local buyers' confidence and interest from expatriates in England and America has helped to push up prices. Also, because Northern Ireland missed the mid-Eighties property boom, negative equity is a rarity.

"The first-time buyers' market has really taken off, and this has had a knock on effect,'' says Denis Robinson of Templeton Robinson. Two-bedroom terrace houses in the university area of south Belfast have jumped from pounds 35,000 to pounds 45,000 in the last year as young people move back into the city.

Since the ceasefire, Belfast has flourished - UK retailers who once avoided the region are fighting for shops in central Belfast, Sainsbury's is building its first store in Northern Ireland in south Belfast and the nightlife is buzzing for the first time in 25 years.

The tree-lined avenues of Malone in south Belfast, a haven for middle- class families during the Troubles, are now highly sought-after by young professionals, many of whom are returning to Northern Ireland from England or the Irish Republic. On a summer's evening, watching Queen's University boat club practising on the River Lagan, it is easy to see the attractions of a house within walking distance of the city's excellent schools, shops and restaurants.

Large Victorian villas in mature gardens along the Malone Road, which a year ago were valued at pounds 170,000, are now fetching pounds 250,000, as people who retreated to the dormitory towns of Antrim and North Down rediscover the benefits of city living.

The strength of demand is good news for vendors. Professor Lee and his wife were delighted to sell their rambling Victorian house in the popular Nottinghill area for 30 per cent above the asking price of pounds 225,000, particularly as they are moving to an expensive part of Cheshire. "House prices have doubled since we moved here six years ago,'' says Mrs Lee.

Like most of the good family houses on the market at the moment, the Lee's houses attracted four buyers as soon as it was advertised. The buyers were invited to bid against each other through the estate agent, Erik Cairns Partnership. The process is beneficial for the vendor, but can be fraught for the buyer, as Mr Cargo recalls.

"You end up in a sort of auction without knowing what the other bidder is doing,'' he explains, "and you have to trust the estate agent to be fair''.

Any hesitation can mean that the house is sold to another bidder before you realise. Mr Cargo lost two properties before he made an offer for the house in Cleaver Park, off the Malone Road. "It was a shock to find houses being traded like commodities,'' he says.

The bidding process has contributed to the extraordinary price rises, but is a symptom of a market where demand outstrips supply. Inevitably, speculators are active now, particularly in streets where the peace process could dramatically alter the character of the area.

Before the Troubles began, the Antrim Road in north Belfast was as sought- after as south Belfast, but the close proximity of the Falls Road reduced the elegant Victorian homes to a shadow of their former values. Now expatriates, nostalgic about their childhoods, , are returning and helping to restore the area's status.

New houses are also in demand. In one development of luxury homes on the Malone Road, 23 homes have been sold off-plan before a single brick has been laid. Some buyers have reserved two or three houses attracted by the potential capital growth on their 10 per cent deposit.

But not everyone is as bullish about the long-term prospects. David Fraser of Moore Homes, a local house-building company, fears that the fragility of the peace process may shatter the present euphoria. "People are nervous about the future, because they don't really know what the peace process will mean for them in the long term,'' he says.

Political posturing between the Irish and British governments can have a direct impact on his house sales in some of the more sensitive areas. His best site at the moment is in Londonderry where the mainly Catholic population is in a confident mood. His fears can do little to burst the bubble of confidence in Belfast, where the recent news of Korean firm Daewoo's investment in the city has estate agents rubbing their hands with glee.

"It should be a welcome boost to the city,'' says Simon Brien, a partner in Erik Cairns Partnership. "The managers will want to live in south Belfast, of course.'' It looks as though prices will rise further along the Malone Road.