SPECIALIST FINANCE INTRODUCER
DEVELOPMENT
Northern Irish SME developers urgently need more funding Roxana MohammadianMolina Chief strategy officer, Blend Network
S
pecialist development finance lender Blend Network recently announced the opening of a new Northern Ireland office in Belfast, responding to the rising demand for specialist finance solutions from local house builders and SME developers. Roxana Mohammadian-Molina, chief strategy officer at Blend, argues that much of Northern Ireland’s lack of housing supply is due to the gap in the supply of finance for housebuilders and SME property developers. The price of an average house in Northern Ireland has increased by nearly £28,000 since the start of the pandemic, equivalent to annual average earnings in the region. According to data from the Nationwide House Price Index, average Northern Irish house prices saw the second-fastest increase of all
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the UK regions and nations last year (+12 per cent YoY), higher than the average annual price increase in the UK and more than double that of London. In 2019, the year before the pandemic set off sharp house price rises across all UK regions, Northern Ireland saw the fastest growth in house prices (+3.2 per cent), more than six times the growth in the UK (+0.5 per cent) at a time when the average house price in London was declining (-2 per cent). While all UK regions have witnessed dramatic house price movements over the past two years due to a combination of the stamp duty holiday and the so-called race for space during and after the peak of COVID-19, the reasons behind Northern Ireland’s price activity appear to be much more complex. The constant lack of supply and the consequent backlog of available new private and social homes across the region have characterised the Northern Irish housing market for well over a decade since many lenders exited the market in the aftermath of the 2008 global financial crisis
that left many small house builders and SME property developers badly wounded. Land and Property Services figures show that between 2005 and 2007, 13,000 new residential units per year were being completed. Yet that number dropped dramatically in the years following the financial crisis, to a low of just 5,410 units in 2013 – when estimates from the Construction Employers Federation show a need for 9,000 homes to be constructed per annum in order to meet current demand. Land and Property Services figures on new dwelling completions suggest that in the decade between 2008 and 2019, a deficit of approximately 27,000 new homes was accumulated, the equivalent of three years’ worth of housebuilding targets. The pandemic has further affected housing delivery; in the nine months to September last year, only 5,560 units were completed – down from 7,644 units in 2018 and just over a third of the figure in 2006 (14,098 units). Northern Ireland’s chronic lack of housing supply is tightly interlinked with the lack of readily available funding for small house builders and SME property developers. The results of British Business Bank’s SME Finance Survey 2020 offer further evidence of an existing bottleneck in funding for SMEs. Respondents to the survey felt that the top two obstacles to SMEs’ demand for finance were the lack of awareness of the finance options available to them (72 per cent), followed by access to the supply of finance (57 per cent). Overall, 83 per cent agreed there was a gap in the supply of finance for SMEs, whatever their stage of growth. If we are serious about tackling the pressing housing crisis in Northern Ireland, we need to ensure that more funding is available for SME property developers to deliver more homes. M I JUNE 2022 MORTGAGE INTRODUCER
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