"Some of the strongest growth has been in the North of the country, with 55% of surveyors stating they have seen prices increase rather than decrease"
House prices have continued to rise towards the end of last year, with the last three months seeing a 2.5% increase (HPI). With the rise in cost, the housing market saw a slight slowdown in activity last month particularly across London and the South East. However, throughout the rest of the country it was a different story with sales continuing to pick-up, especially in the South West and North East of England.
Some of the strongest growth has been in the North of the country, with 55% of surveyors stating they have seen prices increase rather than decrease. Figures show that properties in the North, where traditionally you would always get more for your money are continuing to rise in value. North Shields saw a 10% increase in house price value over the last 12 months making it the property hot spot to watch out for in 2017. Nearby on the Tyne and Wear coast, prices have risen fastest in cash terms where homes were worth over £16k more at the end of 2016 than in the previous year.
While property values in the North East has been on the rise, rental incomes have also been seeing a boost. Looking at the rental market, surveyors expect rents to increase by around 5% per year on average over the next five years, given that the number of tenants are continuing to out-pace the supply of homes.
When looking at this from an investment point of view, the increase has now become surprisingly comparable in the North to the rest of the UK. In fact, most Northern buy-to-let properties are in fact from London and the South alluding to the increase of the ‘hands-off’ investors. Given that property prices in the North-Eastern region are significantly lower with a three-bedroom semi-detached house in the region of £110,000, this results in investors and landlords getting more return for their money. As the cost price is so much lower, and with high growth yields between 6% and 8% in big Northern cities – many are seeking this as a greater investment return than interest from traditional savings account.
The rental market in Northern cities have seen rent rise three times as much as their Southern counterparts. Although it may not seem like it, rates in London has been growing at their slowest rate since the economic downturn in 2008, showing signs that the rental divide between the North and South is starting to close.
With house prices continuing to grow and looking to outstrip the green commuter belt around London, for investors looking to make their money go further it would appear that the opportunities lie north of the country.
