Property Market Analysis
North East house prices were all-but unchanged in October, recording a negligible fall of less than 0.1%.
The typical North East home is now valued at £159,091 - £15 less than four weeks ago. The change follows a fall of 2.8% in September, which in turn followed three successive months of growth - with prices rising by 6.4% between June and August.
Prices remain 2.3% up over the course of 2015 and are 1.1% higher than those recorded in October 2014.
On an area-by-area basis, there were some examples of market volatility. Some striking falls in prices were recorded, principally to the south of the Tyne, with prices in Washington falling by 3.6% and prices in South Shields falling by 3.5%. South Shields prices are now 5.9% lower than August, while a fall of 2.6% means that prices in Jarrow are 5.1% lower than they were in the summer.
Tynemouth saw the region’s largest price rise, with the value of homes in the town rising by 2.8% month on month. Prices in North Shields rose by 2.5%, and prices in Newcastle rose by 1.5%.
Durham City homes continue to be those which have gained the most value over the past 12 months, recording a price rise of £12,402 over the past year. South Shields prices are £10,196 up, and Blyth prices up £10,180 in the same period. Easington values, however, have risen by just £495.
Gateshead has seen prices fall by £2868 since October 2014, and it is named this month’s Best Buy on the basis of historic strong performance and a 3.9% fall in prices over the past eight weeks.
42% of homes in the Gateshead local authority area are semi-detached, slightly higher than the regional average of 39%. A further 26% of properties are terraced, and 17% flats.
58% of homes are owner-occupied, slightly lower than the regional average of 61%. 28% of homes are socially rented (regional average 23%) and 12% of homes are privately rented (regional average 13%).
Rental Market Analysis
North East rents rose by £3 in October, with the typical property in the region now costing £567 per calendar month to rent. Prices are £25 lower than in October 2014.
This rise contributed to an average rise in rental yields – with property investors getting a 0.2% stronger return on their investment, as average North East yields rise to 4.4%.
Easington (£412pcm) remains the cheapest place to rent in the North East, while Durham City (£845pcm) 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 (5.1%) and Seaham and South Shields (4.6%)
The lowest rental yields continue to be found in Whitburn where landlords can expect a 3.2% return on their investment. Yields in Morpeth also fell by 0.3% over the past four weeks.
Gateshead’s falling property prices saw yields rise by 0.5%, with investment returns also improving in Newcastle (0.2%). Durham, Easington, Houghton-le-Spring, Jarrow, Killingworth, Peterlee and Washington all saw yields rise by 0.1%.
Yields in Killingworth have risen by 0.3% over the past eight weeks, and the town is named Best to Invest for the second consecutive month.
37.5% of Killingworth properties are terraced, with a further 29.5% semi-detached, and 43.5% of local homes have at least 3 bedrooms.
67.5% of homes are owner-occupied out-right, or with a mortgage – above the regional average of 61%. 22% of homes are rented from registered social landlords or local authorities, identical to the regional average. 7.5% of properties are rented privately, significantly below the regional average of 13%.
Ajay Jagota, founder and Managing Director of local sales and lettings firm KIS Group responded to the figures: “Although house prices were all-but-unchanged between September and October, there continues to be good news in for renters, landlords and owner-occupiers alike in these figures. Property values are up 14% since we started compiling these figures 18 months ago, and despite rental yields rising for landlords, rents themselves are down year-on-year and rising by less than £1 a week.
Last month I speculated that North East house prices may well be consolidating the values they reached over the summer’s mini-boom, and this month’s figures do little to dissuade me from that view. In that sense they follow a pattern being set by the wider UK economy, with this week’s announcement of slightly reduced economic growth. What we are seeing is sustained and consolidated growth rather than volatile leaps forward or back, and that is no bad thing.
There is more evidence too for my belief that the coming freeze in housing benefit will impact less than anticipated on the North East. Benefits may be about to freeze, but rents are £25 lower than this time last year, softening the blow considerably.
Despite this, there is still an improved picture for landlords with overall yields rising by 0.5% since the General Election and assets appreciating by as much as £1000 a month over the past year.”
