Northern Ireland’s housing market running hot as infrastructure struggles. 

By Jonathan King – Account Director

Should you ever find yourself in a niche pub quiz answering questions about the UK’s housing market, the chances are you’ll struggle with the following questions:

‘Which part of the UK has had the fastest growing house prices for the past three years’, and ‘which city tops the charts for rent inflation?’

The answers, surprisingly, are Northern Ireland and Belfast, and the reason lies beneath the ground.

According to Nationwide, house prices in Northern Ireland increased by an annual rate of 9.7% in the last quarter of 2025 – five times more than the UK average and almost 3.5 times more than the North-West of England in second place. Overall, UK house prices rose by just 0.6% in 2025.

The Northern Ireland rental market is also running hot.

The latest figures from Zoopla found that average rents in Belfast soared by 8.9% last year compared to a UK average of just 2.2%. Liverpool was next with growth of just 4.8% while cities such as Manchester, Leeds and Cambridge grew by less than 2%. Regionally, rents in Northern Ireland are up by a scorching 11%.

While this is excellent news for landlords and those well progressed along the home ownership ladder, it’s terrible news for those just beginning their housing journey. At its most acute, it’s helped push homelessness in Northern Ireland to a record high with 50,000 applicants now waiting for social housing. In the past decade 1,800 people have died waiting for a permanent home.

Housing markets are complex. Part of the reason for Northern Ireland’s stellar house inflation lies in increased supply chain costs, regulation and a slower recovery in prices after the global financial slump of 2008 than the rest of the country.

Much of the problem, however, is simple supply and demand. Northern Ireland just isn’t delivering enough homes to meet demand, and that’s in part because of a growing infrastructure crisis in the region’s sewage and wastewater network.

Years of underfunding and a lack of investment have left much of the region’s network at capacity. If there is no capacity, there are no new sewage connections. No connections mean no housing.

House building in Northern Ireland is at historically low levels. In 2023 housing supply reached a 60-year low with just 5,400 units completed. It hasn’t made much of a recovery since.

According to the region’s sole water company – the publicly owned NI Water – there are now over 100 areas where its wastewater infrastructure is operating at or above capacity. This has halted development of housing, manufacturing and other commercial opportunities across 23 towns and villages.

The problem, ultimately, is one of funding. Unlike every other part of the UK, there is no domestic charging for water in Northern Ireland. Although commercial users do pay, the bulk of NI Water’s funds come from a subsidy from the NI Executive. Other pressing public sector demands have consistently left NI Water with less money than it needs (as independently assessed by the Utility Regulator).

As a result, the company has been unable to complete 25% of current essential works and is facing a £2bn deficit over its next funding period.

The scale of the infrastructure deficit has been well known for years. NI Water launched its own ‘no drains no cranes campaign’ in 2019 and the region’s largest housebuilders formed a new group last year – Build Homes NI – to warn that the pipeline of suitable development sites is drying up. In the absence of opportunities in their home market, housebuilders are now looking outside Northern Ireland for projects.

Last summer the NI Chamber of Commerce, the NI Federation of Housing Associations and the Construction Employers Federation concluded that if housing delivery continues to falter the level of investment forgone will be £4.4 billion, “equivalent to the non-delivery of approximately 19,000 homes”.

The Chair of NI Fiscal Council, Sir Robert Chot, also stated that NI Water’s “current funding model is not fit for purpose”, a sentiment widely echoed in the business community and a growing number of people being priced out of the housing market.

The solution to the problem would seem obvious. In the absence of any further money from the Treasury to support Northern Ireland’s block grant, domestic water users will have to start paying to fund critical water infrastructure.

The cost shouldn’t be unduly onerous and solutions that would cost on average less than £12 per household per month have been proposed.

That, however, is a political decision. And with most local parties publicly expressing opposition towards water charging and elections for Stormont and Northern Ireland’s councils due next spring, the portents for ‘brave’ political choices look slim.

In the meantime, the public will pay the price of political inaction. They may not pay water charges, but they will continue to pay through higher housing and rental costs. There are also the spiralling costs of temporary housing accommodation, lost investment, lost jobs and lost economic growth, plus the appalling environmental degradation of Northern Ireland’s waterways through untreated sewage spills.

There’s no such thing as a free lunch, and as Northern Ireland is beginning to learn, the bill for hidden costs most definitely includes the water.