Member Article

North East house prices fall 0.3% in March

• North East housing market’s hibernation continues with property prices falling by 0.3% in March. Prices have fallen in five of the last six months. • Average home in the region currently costs £154,499, £451 cheaper than February. • Tynemouth is fastest riser (up 1.4%) while Blyth is fastest faller (down 3.6%) • North Shields named “Best to Buy“ with prices up £12,500 in 11 months. Morpeth named “Best to Invest“. • A typical North East property costs £578 a month to rent - £18 more than February.

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 indispensible guide to the state of the North East property market.

Property Price Analysis

The North East housing market continued its spring hibernation in March, with average prices falling by a further 0.3%. An average property in the region currently costs £154,499, £451 less than February.

11 of the 20 areas surveyed by KIS saw prices fall over the past four weeks, with particularly sharp decreases in Blyth (-3.6%) and Houghton-le-Spring (-3.1%). Blyth’s fall follows a strong start to the year, with prices having risen by 4.4% in January and February.

Prices in Jarrow have fallen by 7.7% in the first three months of 2015 – but remain £4000 above this time last year.

Regional property prices have now fallen for five of the last six months – rising only in January – are now 3.3% below their September peak.

Modest rises were recorded in many of the areas surveyed, in particular Tynemouth, which recorded a rise of 1.4%, over four-and-a-half times faster than the regional average.

Prices rises of 1.1% were also recorded in Peterlee, Easington and North Shields, with the later the biggest riser since the start of Housing NOW in April 2014. House prices in North Shields have risen by 7.3% over this period, a rise of over £12,500.

This sustained growth sees the borough named March’s “Best to Buy”. 42% of the 91,295 homes in the town are semi-detached, with a further 25% terraced. Most properties are occupied by two people (35%) or one person (34%).

Three bedroom properties are the most common in North Shields, with 43% of homes having this many rooms. 64% of properties are owner occupied, with 16% socially rented and 11% privately rented.

Rental Market Analysis

A typical North East property costs £578 a month to rent - £18 more than February.

Gateshead continues to offer the best return to landlords with a rental yield of 6.7%, a month-on-month rise of 0.2%. Other regionally strong performers are Petelee (5.3%) Durham City (5.1%) and Sunderland (5%).

Average yields remain static at 4.5%, with noticeable rises in Morpeth (0.7%) and Blyth (0.6%). Easington recorded a sharp fall of 1.2%.

Morpeth’s rising yield and falling average property price see it named this month’s Best to Invest. 33% of properties in the town are detached, with 14% having four bedrooms. 20% of homes are occupied by two adults with children, with 18% occupied by two adults without children.

The statistically most likely age of a resident of Morpeth is 53 (2% of residents).

Ajay Jagota, founder and Chief Executive Officer of KIS Group responded to the figures.

“The North East property market continues to hibernate. Property prices in our region are down 0.3% over the past four weeks, and have now fallen in five of the last six months.

“That said, it’s fairer to say that the market is flat rather than falling - once you strip out outliers like Blyth, down 3.6%, and Houghton-le-Spring, down 3.1%, it looks like another month of no change. Last month an average house would have cost you £154,000, this month it’ll cost you £154,000

“Houses are selling, but that hasn’t yet been reflected in prices, with only places like Tynemouth, where prices are up 1.4% for the second month in a row, or North Shields, where they’re up almost 3% this year already, showing much momentum.

“Dig below the surface and the figures for a lot of individual areas look a bit like a children’s rollercoaster, a gentle rise followed by a gentle fall followed by a gentle rise and so on.

Places like Washington, Whitley Bay, Sunderland and Newcastle are typical, rising or falling by pretty much the same amount they fell or rose by the month before, with rents and rental yields becalmed, temporarily at least.

“Nowhere is this more pronounced than in Blyth, which began the year significantly out-performing the rest of the North East by rising 4.4% in January and February, only to see those gains wiped out this month.

“Blyth does strikingly show the value of our highly focused analysis though. Most statistics would probably lump it in with Cramlington next door, but ours shows you that landlords can expect a 20% better return on their investment, and a yield rising six times faster.

“My hope is that the new Help to Buy ISA announced in last week’s budget will be the shot in the arm the North East housing market need – there’s no question it will help first time buyers overcome obstacles to home ownership. I can’t overstate the impact of Help to Buy getting the housing market moving again, but falling mortgage availability means Help to Buy now needs help.

“If that doesn’t work, it looks like we might have to wait until after the General Election to see real movement back in the market.”

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