The data also revealed that a summer slump for North East values fell by an average of 2.3% a month throughout July and August. The fall all-but wipes out the post-Brexit surge of 4.8% recorded in June with the average North East house now valued at £157,438. House values fell in every single one of the twenty areas surveyed, with the exception of Whitburn, which saw prices rise by 0.05%.
The sharpest areas of decline were Durham City (4.2%), Houghton-le-Spring (3.7%) and Darlington (3.5%).
The regional fall in house prices contrasts with a rise of 5.2% recorded in the same period last year, when prices rose by 3.8% in July and 1.8% in August. The average house price in the North East is currently 3.8% lower than the rate recorded at the end of August 2015.
With a price fall of 8.3% over the course of the summer, Durham is named this month’s “Best to Buy”. Properties in the city had previously boasted capital appreciation of 11.5% over the past 2 years.
Rental Market Analysis
The average North East rent continued to rise by £10 per calendar month of the course of the summer, reaching £610pcm - the first time it has exceeded £600 since our records began. Rents have risen by 7.4% from the £565 recorded in August 2016 – a rise of £45 a month.
Blyth (£397) remains the cheapest place to rent in the North East out of the areas surveyed, with Tynemouth (£1125) continuing to be the most expensive.
Peterlee continues to be the region’s Buy to Let capital, offering rental yields of 6.1% to investors. Other strong performers continue to be Gateshead and
Killingworth (5.9%) and Sunderland (5.3%).
Landlords in Whitley Bay however, can expect to see returns on their investment of just 3.5% - with other comparatively weak performers Morpeth (3.7%) and Blyth (3.9%).
The falling property prices mean the average North East rental has soared to 4.6% over the course of the summer – the highest recorded by KIS Housing Now.
Sunderland’s is named this month’s “Best to Invest” as a result of strong student letting demand, a 4% drop in house prices over the course of the summer and a rise in average rental yield from 4.4% in August 2015 to the current rate of 5.3%.
Ajay Jagota, founder and Managing Director of KIS had this to say: “The current strong performance of the North East rental market is no surprise to us here at KIS where we saw a 15% year-on-year rise in transactions in July, with August continuing that trend.
There’s a hypothesis to be made that the Brexit vote has strengthened the rental sector while slowing growth in residential sales as people put off making long-term decisions like buying houses, but it’s important to remember that regional house prices are essentially unchanged since the vote, a clear sign that some of the more apocalyptic predictions have not even come close to coming true.
There can be no question that rising demand for properties has taken average rents above £600 a month for the first time. Obviously renters will not want to see this, but this rise is broadly in line with inflation and of course rents in our region remain close to 20% lower than the national average.
From a landlords perspective there couldn’t be a better time to invest with strong rental demand and rental yields in the North East at an all-time high and property values dipping slightly following a period of consistent capital appreciation.”
