This, combined with the strong performance of the property market, mean investors will get a marginally poorer return on their investment this month, with the average rental yield falling by 0.1% to 4%.
This fall would have been greater but for 0.5% yield rises in Whitley Bay and Tynemouth. Cramlington, Gateshead, Houghton-le-Spring, South Shields and Washington also maintained their July levels.
Easington (£384pcm) remains the cheapest place to rent in the North East, while Durham City (£819pcm) remains the most expensive.
Gateshead remains the region’s Buy to Let Capital, with an average return of 6.3% for investors. Other strong performers for rental yield include Peterlee (5%) Durham City and Blyth (4.4%).
The lowest rental yields this month are found in Whitburn where landlords can expect a 3.2% return on their investment. Tynemouth’s rental yield rise of 0.5% in just 4 weeks takes the area off the bottom of the investment league table.
South Shields’ comparatively strong performance and rising property prices see it names this month’s “Best to Invest”.
25% of properties in the area are socially rented, 6% higher than the regional average. Only 12% of properties are privately rented, 1% below the regional average. 67% of properties are graded Council Tax band A, the lowest level.
North East house prices continued to grow in August – albeit at a slower rate to July. The price of a typical North East home is August was £163,603, a rise of 1.8% and £2953 more than July. This is a lower rise than the 3.8% recorded in July.
Whitburn was this month’s strongest performer, with a rise of 5.9% in just 4 weeks. Much of the overall growth was centred on other areas to the south of the Tyne, with South Shields (3.8%) Washington (2.8%) and Houghton-le-Spring (2.7%) all outstripping the regional average.
Elsewhere, having been the weakest performing area for growth in July, Blyth recorded the second largest individual rise of 4.1%, with 18 out of 20 of the areas surveyed reporting higher property values.
The only areas to record a falls in prices were Easington (-2%) and Tynemouth – historically the most expensive place to buy out of the 20 surveyed – where prices dropped by 0.3%.
This is the third successive month of growth, with regional property prices rising by 5.1% over the course of 2015.
Prices in Houghton-le-Spring have now grown by 7.1% in 8 weeks – making the town this month’s “Best Buy”.
51% of homes in the Houghton area are semi-detached – compared to a regional average of 39% - with a further 25% terraced. 54% of properties have at least three bedrooms, 5% lower than the regional average.
14% of properties are socially rented, with a further 7% privately rented. Across the North East region as a whole, 23% of properties are socially rented, and 13% privately rented. 61% of properties are owner-occupied, the same as the regional average.
Ajay Jagota, Founder and Chief Executive Officer of KIS Group, said:
“Even if these figures don’t sustain the striking surge of 3.8% we saw in July, they remain impressive.
“A monthly rise of 1.8% is not only the second highest recorded in the North East this year, it’s the second highest rise recorded in the history of Housing NOW.
“North East house prices are now up 5.1% this year and on track to top annual growth of 10%, possibly within the next month or two. Some areas have even achieved already, that, with prices in Whitburn up 11.8% over the past 12 weeks.
“Overall we’re seeing an interesting picture from these figures – house value growth strongest south of the Tyne, but stronger returns for investors to the North.
“Everyone wants to see their assets appreciate in value, and falling rental yields invariably follow rising prices, but with North East rents falling back by £3 we are seeing slightly weakening returns for investors.
“This sends an important message that landlord finances are a good deal more fragile than the press might have you believe and is one of the reasons why so many landlords are concerned by the tax changes announced in the budget which will see higher rate tax relief abolished for landlords.
“This move could cost individual investors thousands of pounds from their pensions or incomes and could mean be a huge disincentive to providing high quality, affordable, rented housing – especially as it’s the accidental and amateur landlords who will suffer the most, especially when interest rates rise.”
