Member Article

North East property prices rose by 1.2% in August

• North East property prices rose by 1.2% in August, consistent with rises in June and July. If outliers are removed from the figures however, this rise falls to 0.9% - the slowest rise in a quarter. • Gateshead named “Best to Buy“ with prices rising by 3% in August and 9.3% since May. • Five areas – including Durham City and Morpeth – see prices fall. • Rents in region remain static, up just £2 month on month. • Seaham consolidates position as “Best to Invest“ with the region’s strongest rental yields for investors rising to 6%.

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 Group Sales and Lettings to give you an indispensible guide to the state of the North East property market.

North East property prices rose by 1.2% in August – the same percentage rise as July - despite reports of a national slowdown. This rise, however, was driven by a surprising rise of 8.8% in Tynemouth. If this outlier is removed from the figures, the rise reduces to 0.9%. This would represent the slowest rise in a quarter and the lowest increase since the 0.3% rise recorded in May.

A typical property in the region is now worth £162,102 - £3386 more than in June. This figure falls to £2399, however, if data from Tynemouth are removed from the figures in both months. The statistics follow confirmation from the Office of National Statistics last week that house prices have finally returned to levels last seen in 2008.

Easington, Peterlee and Gateshead recorded the biggest monthly rises of 3.2% and 3% respectively, followed by 2.6% in Washington and 2.5% in Sunderland. Sunderland’s rise is five times the rise seen in July.

Homes in Gateshead have now risen by 9.3% in the past 4 months, leading to the borough being named KIS’ “Best to Buy” for August.

Five of the areas surveyed saw prices fall, including the previously buoyant areas of Durham City (-0.9%) and Morpeth (-1.3%). Prices also fell in Blyth (-1.2%), Houghton-le-Spring (-1.0%) and North Shields (-0.3%).

Rents in North East homes continue to remain constant, with a typical privately rented property costing £575 per calendar month. This is a rise of 0.3 - £2 – since July.

Rents in Darlington fell by 3%, following a fall of 2.2% in June and 2.1% in May, meaning a fall of 5.8% in four months despite experiencing a moderate rebound of 1.5% in July. Yields in Morpeth remain comparatively low at 3.9%, despite rents rising in the town by 3.4% in August and 10.1% in the last quarter.

Rents in Washington have risen by 4.6% in just two months, suggesting that the area could be one to watch for buy-to-let investors.

Seaham continues to boast the region’s highest rental yields for landlords, with returns of 6%, up 0.3% since July. Competitive yields are also to be found in Newcastle (5.3%), Peterlee (5.2%) and Easington (5.1%).

Responding to the figures, Ajay Jagota of sales and lettings business KIS – named Letting Agent of the Year at the 2013 national Landlord and Letting Awards – said:

“With static rents, competitive rental yields and affordable prices, the North East property market continues to offer much to renters, buyers and investors alike.

“London’s biggest estate agent Foxtons this week predicted a wholesale cooling of the property market in the second half of this year, and a panel of experts predicted that prices will grow by half as much in 2015 as they have in 2014.

“It’s far too early to say with any confidence whether or not this is what we are witnessing in the North East but it’s certainly a conclusion you could draw from this month’s figures.

“Certainly the unexpected falls seen in traditionally popular areas like Durham and Morpeth could suggest that buyers feel prices there peaked there and are increasingly looking further afield to areas like Gateshead, where prices have risen by approaching 10% over the course of the summer.

“It does seem fair to say that the stricter lending rules introduced under the Mortgage Market review earlier in the year appear to have acted as a gentle brake to a potentially runaway Southern property market without curtailing the long overdue resuscitation of the market here in the North East –for now at least.”

This was posted in Bdaily's Members' News section by Ajay Jagota .