Unlocking Growth: North East Property Investment Insights

NEPI takes a look at past, present, and future capital growth trends in the North East of England.

Unveiling the Growth Potential: Understanding Capital Growth Trends in the North East

In the realm of property investment, capital growth stands as a vital metric, signifying the appreciation of an asset's value over time. Alongside rental yield, it constitutes a cornerstone in evaluating the overall returns on investment. Delving into the landscape of the North East's property market, it's imperative to analyze its evolution through three distinct periods: the past, the present, and the future.

Unveiling the Past (2007 - 2019)

During this period, the North East region found itself in a unique position where house prices had yet to surpass their pre-2008 peaks. Specifically, flats in this area faced substantial depreciation, with a staggering drop of over 20% in their value between 2007 and 2013 due to the economic downturn.

However, this depreciation in property value wasn't the sole determinant of investment returns. An intriguing facet emerged in the form of robust rental yields. Notably, a comprehensive report by estate agent Hamptons International revealed that a £50,000 investment in buy-to-let property made 25 years ago yielded a more significant overall return in north-east England compared to London.

The burgeoning rental yields played a pivotal role in propelling the growth of portfolios in the North East. Despite the region experiencing comparatively lower house price growth than southern England, higher rental yields accounted for a substantial 61% of the overall returns.

The Present (2019 - Current)

Recent times have witnessed a divergent trajectory in house price movements across various regions. While certain areas of the North East observed significant price surges, other parts of the UK experienced contrasting trends. The North East emerged as a standout performer, showcasing a commendable 5.5% increase in house prices over 12 months.

Contrastingly, regions like Kensington, Westminster, and Chelsea in the South witnessed price declines, reflecting a broader nationwide shift in housing market dynamics. The North East's resilience was further underscored by consistent growth in gross yields, surpassing those of several other regions in the UK.

Forecasting the Future (Current - 2028)

Insights gleaned from Savills research project an optimistic outlook for the North East's property market. Projections indicate that both Wales and the North East will experience robust overall price growth in the upcoming years. This foreseen growth trajectory largely stems from a shift in national focus away from the inflated prices of London towards more affordable and accessible areas.

A notable trend driving this shift involves major businesses relocating northward from the capital, alongside a discernible migration of young families seeking affordability beyond the confines of the South. Hampton's research aligns with this forecast, positioning the North East as the top performer in the coming years. With relatively subdued price growth compared to other regions and a less strained housing affordability index, the North East displays promising potential for further appreciations in property values.

Conclusion

The North East property market, characterized by its past resilience, present growth, and promising future prospects, stands as a beacon of opportunity for investors seeking both capital appreciation and consistent rental yields. Understanding the nuanced interplay between past trends, present dynamics, and future forecasts is pivotal in capitalizing on the burgeoning potential that the North East holds for property investment with NEPI.


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