Member Article

North East house prices rise 1.9%

• House prices in the region rise £3043 in past 4 weeks. Typical North East home is now valued at £162,134.
• Rents fall by 2.5% with 0.3% lower returns for landlords. Rents in the region are 7.6% lower than this time last year.
• Tynemouth sees year-on-year value rise of almost £20,000
• Morpeth named November’s “Best to Buy”, South Shields named “Best to Invest”.

This month’s Housing Now report from KIS Group can be downloaded here.

North East house prices appear to be making a strong finish to 2015 – rising by 1.9% in November.

The typical North East home is now valued at £162,134 - £3043 more than four weeks ago. Prices were previously static in October and fell by 2.8% in September. Prior to this there had been three successive months of growth - with prices rising by 6.4% between June and August.

Prices are now 4.2% up over the course of 2015 and are 3.1% higher than those recorded in November 2014.

Peterlee saw the region’s largest rise, with prices 3% above those recorded in October. Strong performances were also recorded in Peterlee (2.7%), Gateshead (2.6%) and Darlington (2.5%).

Prices in Tynemouth are now 4.9% higher than those recorded in September. This means the area overtakes Durham City for the region’s biggest year-on-year rise, with prices £19,697 higher than November 2014.

Striking falls were recorded in other areas, however. Prices in South Shields fell by 4.7%, while prices in Washington fell by 2.1% - a slump of 5.7% over the past 8 weeks. Prices also fell by 2% in Morpeth.

Morpeth’s falling prices see it named this month’s Best to Buy. 37% of properties in Morpeth are semi-detached, slightly lower than the regional average of 39%, but 28% are detached – significantly above the regional average of 16%.

75% of properties are owner-occupied, noticeably higher than the regional average of 68%. Just 9% of properties are privately rented (compared to a regional average of 13%) with 14% socially rented – half the regional average of 28%.

North East rents fell by £19 in November, a decline of 2.5%. The typical property in the region now costs £553 per calendar month to rent – a fall of 7.6% and £45 since this time last year.

Combined with rising property prices, this has seen moderately diminishing returns for investors, with rental yields falling by 0.3%, with the average North East rental yield falling to 4.1%.

Blyth (£417pcm) and Peterlee (£420pcm) have fallen beneath Easington (£429pcm) as the cheapest place to rent in the North East, while Durham City (£806pcm) remains the most expensive.

Gateshead remains the region’s Buy to Let Capital, with an average return of 6.8% for investors. Other strong performers for rental yield include Peterlee (5%) and Seaham and Newcastle (4.6%)

The lowest rental yields continue to be found in Whitburn where landlords can expect a return of just 3.2% on their investment. Yields in Morpeth have now fallen by 0.5% over the past eight weeks.

Investment return did improve however in Sunderland (0.2%) and South Shields, Easington and Houghton-le-Spring (0.1%).

Declining prices and rising yields in South Shields see it named this month’s Best to Invest.

Just 5% of properties in the South Shields parliamentary constituency are detached with 39% of homes are semi-detached, in line with regional averages. 30% of homes are terraced, again in line with regional averages.

45% of properties have at least three bedrooms, and 55% of homes are owner occupied, with 30% socially rented and 12% privately rented.

Ajay Jagota, founder and Managing Director of local sales and lettings firm KIS Group and founder of Dlighted, an insurance backed deposit-free renting solution which drastically reduces the costs for tenants finding and moving homes whilst still protecting both agents and landlords against damage, responded to the figures.

He said: “As the nights draw in November is traditionally a quieter time of the year for estate agents so it’s welcome news for the region to see property prices finishing the year so strongly.

“It’s striking too to see that price growth is spread so evenly throughout the region, with monthly growth in excess of 2% in areas from Darlington and Easington in the South to Cramlington and Whitley Bay in the North.

“What is most noticeable of all is how far regional rents have fallen over the course of both the past month and the past 12 months – 2% down from October and 7.5% down from November 2014.

“Of course with Christmas just around the corner rents which are £45 a month cheaper are great news for renters. There are however wider implications for the North East.

“On a national level landlords are taking quite a hit at the moment – with a 3% Stamp Duty surcharge announced in last week’s Autumn Statement and tax changes already hitting property investors in the pocket.

“I appreciate that landlords don’t elicit an awful lot of public sympathy, but the ever-increasing importance of the privately rented sector in meeting the UK’s housing needs makes it vital that landlords are able to improve and expand their portfolios and not encouraged to abandon them all together”.

Ajay Jagota, founder and Managing Director of local sales and lettings firm KIS Group and founder of Dlighted, an insurance backed deposit-free renting solution which drastically reduces the costs for tenants finding and moving homes whilst still protecting both agents and landlords against damage, responded to the figures.

He said: “As the nights draw in November is traditionally a quieter time of the year for estate agents so it’s welcome news for the region to see property prices finishing the year so strongly.

“It’s striking too to see that price growth is spread so evenly throughout the region, with monthly growth in excess of 2% in areas from Darlington and Easington in the South to Cramlington and Whitley Bay in the North.

“What is most noticeable of all is how far regional rents have fallen over the course of both the past month and the past 12 months – 2% down from October and 7.5% down from November 2014.

“Of course with Christmas just around the corner rents which are £45 a month cheaper are great news for renters. There are however wider implications for the North East.

“On a national level landlords are taking quite a hit at the moment – with a 3% Stamp Duty surcharge announced in last week’s Autumn Statement and tax changes already hitting property investors in the pocket.

“I appreciate that landlords don’t elicit an awful lot of public sympathy, but the ever-increasing importance of the privately rented sector in meeting the UK’s housing needs makes it vital that landlords are able to improve and expand their portfolios and not encouraged to abandon them all together”.

This was posted in Bdaily's Members' News section by Ajay Jagota .