North East house prices fell 1.8% in April, slashing more than £3000 from price of average home.
The early summer slowdown hitting national house prices seems to have reached the North East – but property values in the region remain much stronger than this time last year.
Figures from my sales and lettings firm KIS and deposit free renting firm Dlighted show the North East housing market’s strong start to 2018 coming to an end – with homeowners seeing £3139 slashed from the value of the average home, a fall of 1.8% in percentage terms.
Regional house prices previously rose 3.2% in April and 1.3% in March.
A typical North East home is currently worth £170,373, compared to £173,512 four weeks ago – but 4.2% above the £163,467 recorded in May 2017, adding £6906 to the cost of an average house.
Figures from the Office of National Statistics indicate that London property prices have fallen by 0.7% over the past year.
19 of the 20 of the areas surveyed recorded property prices falls in May, with only Houghton-le-Spring (+1.3%) recording an increase in value.
Peterlee, Morpeth and Seaham performed comparatively strongest, with prices dropping back by -0.5%, equating to £466 in Peterlee.
Tynemouth homes have seen their values fall furthest, dropping 3.7% – or £11,291 in cash terms. Other poorly performing areas include Sunderland (-2.9%) Durham City and Blyth (both -2.4%).
House prices in Killingworth have however performed strongest in percentage terms over the past 12 months, recording an annual rises of 10.3% – adding £16,180 to the value of an average home.
Other areas recording strong annual growth in percentage terms include Houghton-le-Spring (9.4%) Easington (7.8%) and Peterlee (7.2%).
Homes in Houghton-le-Spring also performed strongly in cash terms, with property values up £12,652. Other property hotspots over the past 12 months include Whitburn (£12,349), Whitley Bay (£11,689) and Tynemouth (£10,677). Cramlington in comparison saw prices rise by just £1929.
Renters in the region are slightly worse off than they were four weeks ago, with average rents up £6 a month from four weeks ago, rising from £574 to £580 – costing tenants £72 a year.
Easington is currently the cheapest place to rent in the North East, with average monthly rents of £433, followed closely by Blyth (£435) and Seaham (£440). Tynemouth (£1046) and Durham City (£801) are this month’s most expensive.
The North East currently offers investors average rental yields of 4.1%, a 0.1% rise since April. Landlords in Peterlee (5.9%) Newcastle (5.1%) and Gateshead (5%) are currently seeing the best returns.
Whitley Bay’s current rental yield of 3% is above the all-time regional low recorded last month, but still the lowest in the North East.
Newcastle’s yield of 5.1% means it offers better returns for investors than Gateshead (5%) for only the third time on record.
Below average returns are also currently being experienced by investors in North Shields (3.4%) an Whitburn and Darlington (3.5%)
“Across the UK the property market does seem to be slowing down, but even if this slowdown seems to have reached us here in the North East our property market has nonetheless out-performed London over the past 12 months.
“North East house prices have fallen everywhere in the past month, but this fall has by no means been uniform. Peterlee prices are down £466, which is the kind of offer you’d happily take below the asking price if you were selling your house. In Tynemouth that figure is £11,291, which you probably wouldn’t.
“Although stable rents and falling house prices might superficially seem good news for renters, there is still the matter of saving for a deposit on a property– something a rental deposit just makes harder. An average North East tenancy deposit will currently set you back £870, rising to £1202 if you live in Durham. Wouldn’t that money be better spent literally anywhere else?
“High cost purposefully pricing people out of properties, which is hideous news for landlords and letting agents, who could be finding tenants faster by letting properties with zero deposit and high levels of protection with low cost deposit replacement insurance.”
KIS Group were the first letting agents in the UK to abolish tenancy deposits, leading to the firm being named Letting Agent of the Year in 2013.
Dlighted is a deposit free renting solution which uses deposit replacement insurance to protect landlords and letting agents against rent arrears, property damage and legal fees without charging tenants a deposit.