Member Article

Rapid acceleration in North East house prices

• Regional house prices rose by 3.8% in July – five times faster than June and almost double the previous record rise.

• Killingworth records monthly rise of 6%, with prices in Washington, Easington, Peterlee and Darlington also rising by 5% or more.

• Typical North East home now valued at £160,650, £5715 more than June.

• Rents in region rise by just £3

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.

North East house prices accelerated rapidly in July – rising by an average of 3.8%

The rise is 5 times faster than June’s rise of 0.8%. This is not just a new record rise for Housing NOW but double the old record – with every single one of the 20 areas surveyed recording price rises over the past 4 weeks for the first time.

Even the comparatively weakest performing area of Blyth recorded a rise of 1.8%, 0.3% higher than the previous record monthly average rise of 1.5%, set in September 2014.

The price of a typical North East home is July was £160,650, £5715 more than June.

Killingworth recorded the largest individual rise of 6%, followed closely by Easington (5.3%), Peterlee and Darlington (5%) and Newcastle (4.9%).

Since regional house prices began to grow again in June – having fallen in seven of the previous eight months – prices have grown by 6.4% in Washington, 5.9% in Whitburn, 5.6% in Darlington and 5.4% in Blyth.

Prices in Durham City have now grown by 7% since April – making the city this month’s “Best Buy”.

48% of homes in the City of Durham Parliamentary Constituency are semi-detached, with a further 24% terraced. 63% of properties have at least three bedrooms. The most common number of people in a household is 2 (36%) followed by 1 (30%).

19% of properties are socially rented, with a further 13% privately rented. Across the North East region as a whole, 23% of properties are socially rented, and 13% privately rented.

At the time of the last census, 64.8% of DH1 residents rated their health as “very good”, compared to a national average of 47.2%

North East rents have been unable to keep pace with property prices, rising by £3 – 75p a week. The typical property in the region costs £568 per calendar month to rent.

As a result, property investors will get a marginally poorer return on their investment this month, with the average rental yield falling by 0.1% to 4.3%.

Easington (£404pcm) remains is the cheapest place to rent in the North East, while Durham City (£864pcm) remains the most expensive.

Gateshead remains the region’s Buy to Let Capital, with an average return of 6.3% for investors. This is down by 0.3% over the past 4 weeks however, and is 0.9% below the high of 7.2% recorded in 2014.

Other strong performers for rental yield include Peterlee (5.7%) Durham City and Blyth (4.9%). Whitley Bay and Peterlee bucked the regional trend of yield decline with rises of 0.5% and 0.4% respectively.

The lowest rental yields continue to be found in Tynemouth, where landlords can expect just a 3.1% return on their investment.

Peterlee is this month’s “Best to Invest” as its rental yield has risen from 3.9% in April 2014 to 5.7% today.

40% of properties in Peterlee are semi-detached, with 34% terraced and 19% detached. 65% of properties have at least three bedrooms.

63% of Peterlee residents are work between 31 and 48 hours a week. 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 Chief Executive Officer of KIS Group responded to the figures.

He said: “The summer is always the busiest time of the year for estate agents, but a price rise of this scale is almost unprecedented.

“To put this into context, this isn’t just the highest recorded rise in the history of KIS Housing NOW – it’s more than twice the previous record!

“Its early days of course, but it could mean that the ripple of the property boom in the South East and London have finally reached the North East, as I have been predicting for some time.

“If the market performs as strongly in August and September, we could easily see an annual average price rise across the North East in excess of 10% - something unthinkable even just a couple of years ago.

“Last month it was noticeable that even with prices positive after several month of falls, the south of the region was lagging behind somewhat. We’re now seeing prices in places like Washington rising by 6.4% in two months and Darlington by 5% in just one.

“It’s natural that from an investment point of view, rents aren’t likely to keep pace with that, but it’s important to remember that the North East remains highly attractive to property investors.

“Take Peterlee for example. If you’d bought a Buy to Let Property there in April last year, not only would your investment have appreciated in value by 5% in the last 4 weeks alone, the rental return on your investment would have all-but doubled.”

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