The tiny (but welcome) rise puts to an end three consecutive months of falling house prices in the region. The average cost of a home in the NOrth East now stands at £144,872 - the lowest levels for nine months.
The overall fastest riser in the region was Blyth, which managed to rack-up 3.1% growth. Tynemouth and North Shields picked up 1.3% and 1.2% respectively. Matching Tynemouth on 1.2% was Gateshead, with Durham City (1%) and Sunderland (0.9%) closely following behind.
However, several areas saw prices continuing to fall. The average price of a proprty in Whitley Bay tumbled by 3.1%. Jarrow lost 2.1% of the cost of an average home. Darlington, Killingworth (-0.8%) and Newcastle (-0.5%) both suffered minor losses.
Whitley Bay’s surprise fall follows prices rising by 5.2% over the past four months – making the town this month’s Best to Buy.
The majority of properties in the town are semi-detached (42%) or terraced (40%). 37% of households are classified as families with no dependent children and 30% households with dependent children, indicating a popularity with young professionals. 32% of residents are between the ages of 25 and 49, the single largest demographic.
Rental Market Analysis
The average cost of renting a North East home is £529 per calendar month - £29 cheaper than December. Falling rents have contributed to a slight reduction in the typical rental yield to landlords, which is down 0.2% to 4.4%.
Yields rose however in Sunderland (0.1%) Whitburn (0.2%) and Washington (0.2%), indicating a comparatively strong rental market in South Tyneside.
Gateshead continues to offer the region’s best returns for investors – 7% - although
Sunderland’s above average and rising rental yield of 5.1% sees it named this month’s “Best to Invest”.
Postcodes like SR1 and SR2 have 27% student populations, with 34% of residents under the age of 25. 76% of properties in the areas are flats, apartments and maisonettes and 55% of properties are single occupancy.
Ajay Jagota, founder and Chief Executive Officer of KIS Group responded to the figures. “It’s been a sluggish start to 2015 for the North East housing market, with our research showing prices up just 0.4%, following a 2.2% fall in December and meaning prices are still 2.6% beneath their peak in September.
Some of that is to be expected - house prices traditionally fall back in December because people don’t move house before Christmas, but you would expect them to rebound in the New Year when people make it their New Year’s Resolution to move house.
So why hasn’t this happened? Well, I believe it has – we just haven’t seen it reflected in the figures, yet. But at KIS we’ve had an extremely busy January and I think it’s only a matter of time until we do.
There are a couple of other things to worth bearing in mind. Firstly, the Nationwide this week reported that national house prices rose by 0.3 in the last 4 weeks – if that’s the case, the North East is outperforming the rest of the country, albeit by just 0.1%
Secondly, a lot of places are seriously outperforming both the region and the nation. Places like Sunderland, North Shields and Gateshead have had price rises of over 1%, twice the regional average, and in the case of Blyth, its 3.1% rise is ten times the national rate.
It’s been an especially strong month for North Tyneside – with above average prices rises in North Shields,Tynemouth and Blyth of course – which makes the 3% fall in Whitley Bay so striking. It’s usually a very strong performer, but prices are down over 5% over the past couple of months, which is why we’ve named it this month’s best buy.
These figures prove my point that we are seeing a more slow motion recovery to the UK housing market than you would expect. Traditionally after a crash you see things pick up first in London and the South East, with rippling out towards the rest of the country, finally reaching the North East.
This cycle has taken longer than usual this time around, leading some people to conclude that this is a different sort of recovery which doesn’t reach out region. I don’t think that’s the case at all.
The North East housing market is currently at what I call the proving stage – it might not look like a lot is happening if you take a glance, but a lot is happening beneath the surface. Before you know it, you’re loaf has doubled in size and you’re ready to cook.
I’ve predicted that North East house prices will rise by 10% this year, and I stand by that prediction.
Despite rents falling by about £7 a week over the past month, and yields down 0.2%, the North East still offers very strong rental yields for landlords, with places south of the Tyne like Gateshead, Sunderland and South Shields very consistent performers. You’re looking at 5% yields on homes in those areas, which compares very favourably with any savings rate out there.”
