The North of England has suffered in years gone by from reduced employment as well as ongoing economic challenges and these have been reflected in local property markets. While it would be unfair to say that all property markets in and around Newcastle are struggling, the general consensus seems to have been that North of England property prices have suffered more than most. However, is the Newcastle property market making a comeback?
There is growing evidence that investors are looking outwards of London due to the ever increasing cost of property in the capital and moving further north. Are investors about to land in Newcastle and push Newcastle real estate prices higher?
London market starting to cool
Despite rumours and counter rumours, there is statistical evidence to suggest that the London real estate market is beginning to cool. While the average property is still worth in excess of £400,000 we only saw a 0.3% increase between September and October with some areas of the UK experiencing increases upwards of 2%.
Quote from PropertyForum.com: “The UK property market is often dominated by London which is head and shoulders above the rest of the UK real estate sector. If you dig a little deeper, you will see that while there has been a general recovery in UK property since the 2008 worldwide recession the rate of growth is nowhere near that seen in London.”
It may well be a case of growing momentum in other UK property markets outside of London which will eventually impact London demand and London prices. Those who suggest that the London property market will fall heavily and we will see significant disinvestment and reinvestment around the country are probably well short of the mark. However, there are growing signs that the North of England could be the new property mecca in the short to medium term.
Newcastle property prices
During October the average property in Newcastle increased in value by 0.4% and local experts are suggesting momentum is growing and this figure will increase. When you bear in mind that Newcastle property prices are still more than 10% below their 2007 peak, with London prices more than 30% above their 2007 peak, this perfectly reflects the recent direction of these markets. Indeed the average cost of a property in Newcastle is around 40% below that of the UK average coming in at around £124,000.
The fact remains, and some may dispute this, that local property markets will and always have depended upon local economies. The North of England is not as active as it has been, ongoing austerity measures are hitting the region hard but there are signs of recovery and investment is beginning to filter through. In some ways the ongoing increase in London real estate prices has helped other areas such as the North of England because in relative terms they are looking better and better value.
Spreading the risk
While Newcastle has been mentioned as a potential growth property market in the short to medium term there are also other areas in the region attracting attention. If you are looking at property investment, as opposed to buying a home to live in, there are many factors to take into consideration such as infrastructure, employment opportunities and average wealth in the area. Some real estate experts have made good returns looking at undervalued sub-property markets in growing regions but in many ways the further north you go the less attractive this strategy looks.
Newcastle is an extremely large city with a vibrant financial community and, like so many other regions, some areas which offer very expensive luxury properties. It will depend upon your financial situation, funds available and your timescale, but if the region as a whole is to benefit then an investment in the central Newcastle property market or perhaps properties in the more sought after immediate outskirts may look attractive?