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North East housing market briefing - April 2015

Like every other corner of the UK, the North East property market is continuing its pre-Election hibernation.

Our data shows house prices in the region falling by 0.3% in March, meaning they have now fallen in 5 of the last 6 months.

With the Halifax reporting that national house prices rose 0.4% in the same period, it appears UK prices are again accelerating away from the North East.

That doesn’t mean the housing market is falling in our region – it’s actually up 11% compared to this time last year – but at the moment it is as flat as a stottie cake, and has been for several months. In February, an average house would have cost you £154,000, in March it cost you £154,000.

Beneath the surface, there are huge variations. North Shields, for example has seen prices rise by 4% over the first 12 weeks of the year, compared to an average fall of 0.2%. Jarrow meanwhile has seen prices fall by 7.7% in just three months.

The problem appears to continue to be lack of mortgage availability, something compounded by research from Moodys showing that this uneven house price growth means Northerners are twice as likely to be “mortgage prisoners”, unable to exchange their mortgages to a more favourable package.

I’m still hopeful that once the uncertainty of the General Election is over things will pick up again, and history tells us that with so pent up energy set to be released that should be the case no matter what the outcome. Although it’s no secret to say Labour’s proposals are far from popular in the lettings industry in particular, policies like the Mansion Tax they and the

Liberal Democrats are proposing with only affect five properties currently listed on OnTheMarket within 30 miles of KIS Head Office!

One of the reasons for my confidence is the impact on the affordability of moving home of Stamp Duty reforms announced in the Chancellor’s Autumn Statement, late last year.

The changes, which see buyers paying no stamp duty on the first £125,000 of a property’s value and 2% on the remaining amount – rather than the previous flat rate of 1% - would make a home somewhere like Jarrow (average house price £122,160) much more appealing by lifting it out of Stamp Duty altogether.

A buyer in Gateshead (average house price £135,622) now faces a Stamp Duty bill of £212.44. Before the changes that figure would have been £1356. In South Shields (average house price £130,788) the bill has fallen from £1307.88 to £115.76.

Figures from Homelet this week showed the North East to have England’s worst rate of rental growth, and to be one of only two areas where rents are actually falling, down 0.6%

This hasn’t been reflected in our data, but again rents are flat in the North East and have been for some time. The average rent in a North East home was £560pcm in April 2014, that’s what it was last month too.

Maybe North Easterner’s ability to haggle has something to do with that. Figures from the National Landlords Association recently showed 22% of new tenancies in our region were agreed from less than the advertised rent, the highest figure outside of London.

Despite this, North East yields remain nationally enviable. Investors can expect to make yields of 6.7% in Gateshead, with close to 5% possible in rental hotspots like Durham City and Newcastle.

Every month we produce a report on the current state of the North East market - KIS Housing NOW – pulling together up-to-the-minute data on a street-by-street level to offer an indispensible guide to the state of the North East property market.

One figure really stood out for me this month, a figure that less focussed analysis might have lost altogether. Most researchers would most likely lump Blyth and Cramlington in together.

They are next door after all. Our local analysis shows that yields in the former are rising six times faster than the later, with a 20% better return on a landlord’s investment.

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