Landlord returns are sliding as house prices fall – and not just in cities such as Hartlepool (pictured) Photo: NDL642M
Research by Home.co.uk shows that property prices in some of the worst performing areas are falling by more than 7 per cent per year. Landlords’ return on investment is also on the slide, with 11 locations recording negative real yield, which occurs when the value of the property depreciates by more than the annual rent.
Towns and cities in the North East of England have also been badly affected as austerity measures and joblessness continue to bite. Property price falls in the 12 months to September have been recorded in Newcastle upon Tyne, South Shields, Gateshead, Middlesbrough, North Shields, Hartlepool and Stockton on Tees. Of these, the coastal town of Hartlepool has suffered the most, with annual property prices dipping by 7.5 per cent and the real yield for landlords standing at -1.8 per cent in September.
These “black holes”, though, are not just located in the North. Prime London boroughs feature prominently in Home.co.uk’s list of the top 20 property black spots. The figures for the 12 months to September this year show Belgravia has seen a slump of 7.6 per cent in annual house prices and the real yield in the same month was -4.4 per cent.
In Soho, another swanky London borough, property prices over the same period fell by 6.8% and the real yield for September was -3.5 per cent. Meanwhile in Westminster, the annual property price fall recorded in September was -5.2 per cent, with landlords facing a real yield of -1.8 per cent.
Seaside towns are another casualty of the cooling property market. Prices have fallen by 7.1 per cent over the 12 months to September in Poole, Dorset, where the real yield for landlords is -2.5 per cent. In Margate, property prices fell by 6 per cent over the same period and the real yield was -2.1 per cent in September.
Home.co.uk director Doug Shephard commented: “Price falls in the super-rich suburbs of central London have come about for very different reasons to the falls observed in the North. Prices soared in central London post- financial crisis as foreign investors sought safe haven investments. Such was the demand for this type of premium property that prices overheated, reaching a peak last year, and are now in the throes of the painful process of market correction.
“By contrast, Hartlepool home prices fell hard following the financial crisis and price recovery has been elusive. In fact, price erosion continues in many such locations where supply seemingly continues to outweigh demand.”
Source: The Movechannel