Prices fall at fastest rate since December 2014 – but remain 8.8% up year on year.- Almost £5000 falls from value of typical property
- Property prices fall in all but two areas, including a fall of 6.8% in Cramlington – but buck the trend to rise in North Shields and Whitley Bay.
- Regional rents fall by £3 to £551pcm – £4.50 a week cheaper than this time last year.
KIS Housing NOW – Housing North of Watford – pulls together the most authoritative and up-to-the-minute data and the expert market analysis of the KIS Intelligence Service to give you an indispensable guide to the state of the North East property market.
Property Market Analysis
North East house prices have started 2016 with a bump – falling by 3.1% over the first four weeks of the year
Prices fell almost across the board, wiping £4742 from the cost of an average North East home.
A typical North East home will currently cost you £158,755 – 8.8% higher and £13,883 more than the £144,872 recorded in January 2015.
North Shields and Whitley Bay alone saw values rise, with property prices going up by 2.7% and 2.5% respectively.
Prices fell at their fastest rate since December 2014 – which saw a fall of 2.2% – and there were particularly striking falls in Cramlington (-6.8%) Killingworth (-5.5%) and Morpeth (-5.1%)
Whitley Bay is the fastest-riser over the past 12 months, rising by £17,159 since January 2015 – closely followed by neighbour Tynemouth, where prices are £15,049 up year-on-year. Prices in Peterlee, however, are £2306 down on this time last year.
Cramlington’s striking price fall and the comparative strength of property prices to the North of the Tyne see it named this month’s “Best Buy”.
39% of properties in Cramlington are semi-detached (equal to the regional average), with a further 28% terraced (slightly below the regional average of 30%)
72% of homes are owner-occupied out-right, or with a mortgage – significantly above the regional average of 61%. 18% of homes are rented from registered social landlords or local authorities, 4% below the regional average. 9% of properties are rented privately, well below the regional average of 13%.
Rental Market Analysis
North East rents fell by £4 in January, with the typical property in the region now costing £551 per calendar month to rent. Prices are £18 a month lower than in January 2015.
Falling house prices nonetheless contributed to an average rise in rental yields – with property investors getting a 0.1% stronger return on their investment, as average North East yields rise to 4.2%.
Easington (£409pcm) remains the cheapest place to rent in the North East out of the areas surveyed, while Durham City (£842pcm) remains the most expensive.
Gateshead remains the region’s Buy to Let Capital, with an average return of 6.6% for investors. Other strong performers for rental yield include Peterlee (5.1%) and Seaham (4.7%)
The lowest rental yields continue to be found in Morpeth and Whitburn where landlords can expect a 3.3% return on their investment.
Cramlington, Killingworth and Morpeth all saw investment returns rise by 0.3% – three times faster than average. Durham and Easington (0.2%) also saw above average yield rises.
As Peterlee continues to outperform the vast majority of areas in terms of rental yield, it is named this month’s “Best to Invest”. Today’s rental yield of 5.1% compares with a yield of 3.9% in April 2014.
40% of properties in Peterlee are semi-detached, with 34% terraced and 19% detached.
65% of properties have at least three bedrooms.
25% of properties in the area are socially rented, 6% higher than the regional average. Only 9% of properties are privately rented, 4% below the regional average.
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.
“While we would certainly expect to see the housing market slow at this time of year, a fall of this scale is certainly unexpected.
“There’s certainly no cause for alarm. Prices fell by a similar amount in December and January last year and bounced back strongly as the year progressed – as demonstrated by the fact they almost 9% higher than this time last year.
“There are a number of possibilities as to why this fall might have happened. People could have made a New Year Resolution that 2016 is the year they move to a nice home, bringing a slew of lower priced homes to market, lowering average property prices. It has also been a particularly cold month, which will doubtless have discouraged people from house-hunting.
“Another explanation a lot of people have given for falling house prices is a reported rush by landlord to reduce the size of their portfolios before a series of tax changes come into force in April. We shall see if there is any truth in this over the coming months.
“What continues to be very noticeable, both in this research an our monthly Metro Rent Map is the comparative strength of property prices North of the Tyne, never more so this month than with North Shields and Tynemouth the only areas surveyed not to experience a price fall.
“For those landlords looking to expand their portfolios it’s certainly good news – with rising yields and falling prices creating the perfect environment for investment.”