The housing market in the North East has experienced significant activity in recent years, with rent prices steadily increasing. However, recent data indicates that these rent rises may soon level off, bringing stability to both tenants and landlords. In this blog, we delve into the key trends shaping the housing market in the North East and discuss how North East rent rises are evolving. We’ll also explore why the market is considered healthy, why a potential retrenchment may not be bad news for property investors, and how Clarice Carr & Co can help you navigate these changes.
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Historical Context: A Decade of Change
Over the last decade, the North East has seen consistent growth in its property and rental markets. While affordability has been a long-standing advantage for this region, recent years have witnessed North East rent rises that mirror trends in other parts of the UK. For instance, Newcastle upon Tyne experienced a 4.6% increase in average rents, as reported in October 2024, rising from £961 to £1,005 year-on-year. Though significant, this rise is more subdued compared to the 7.7% increase across the broader North East.
What’s Driving North East Rent Rises?
Several factors have contributed to the region's rental growth:
Increased Demand: An influx of professionals, students, and families relocating to cities like Newcastle has amplified housing demand.
Limited Supply: A shortage of affordable rental properties has pushed up rents, particularly in urban areas.
Economic Recovery: As the UK economy rebounds, more people are entering the rental market with higher budgets.
Why the Market Is Healthy
Despite rising rents, the North East’s property market remains fundamentally strong and balanced. Here’s why:
Affordability Compared to Other Regions: Even with North East rent rises, the region is far more affordable than hotspots in the South East or London, making it an attractive option for renters and investors alike.
Strong Rental Yields: Landlords continue to enjoy competitive rental yields, as property prices in the North East are still relatively low compared to the income they generate.
Resilient Demand: With steady growth in the local economy and a diverse mix of tenants, from students to young professionals, demand for rental housing remains robust.
This healthiness ensures the market is not overheating, unlike in some regions where excessive rent hikes have created affordability crises.
Forecast: Stabilisation on the Horizon
The latest projections for the UK housing market suggest that the annual growth rate of rents will decelerate over the next four years. Nationally, rent increases are expected to drop from 6% in 2024 to 2.5% by 2028, with a cumulative rise of 20.5% across the five-year period. This trend is likely to reflect in the North East as well, bringing relief to tenants.
While house prices in the North East have risen sharply—Newcastle alone saw an 8.3% jump in average house prices to £207,000—the moderation in North East rent rises indicates a more balanced market ahead.
Why a Retrenchment May Benefit Investors
For property investors, a retrenchment or stabilisation in the market is not necessarily a negative development. Here's why:
Sustainable Growth: Stabilised rents create a more predictable and sustainable investment environment, reducing the risk of rapid fluctuations that can lead to tenant turnover.
Tenant Retention: Lower annual rent increases make it easier for tenants to stay long-term, reducing void periods and increasing landlord profitability.
Opportunities for New Investment: A slower growth trajectory makes it easier for new investors to enter the market without being priced out by unsustainable trends.
These factors ensure that investors in the North East can continue to reap the benefits of a healthy market while also supporting long-term stability.
Local Insights: Spotlight on Newcastle upon Tyne
In Newcastle, key data highlights a nuanced picture of the housing market:
Monthly Rents: £1,005 on average, marking a 4.6% increase over the year.
First-Time Buyers: The average price paid by first-time buyers rose to £180,000, an 8.3% rise from 2023.
Mortgage Buyers: The average house price for mortgage buyers is £216,000, reflecting an 8.9% year-on-year increase.
These figures underscore the interplay between the sales and rental markets. As more individuals are priced out of buying, the rental market continues to absorb demand, influencing North East rent rises.
Looking Ahead
The North East remains an attractive region for renters and investors alike. While North East rent rises have been a defining feature of the market, the forecasted stabilisation offers hope for a more sustainable housing landscape. For tenants, this means greater predictability in budgeting, and for landlords, it ensures steady demand without pricing out potential renters.
With its healthy balance of affordability, demand, and investor returns, the North East property market is poised to thrive in the coming years, even as rent increases slow. And with Clarice Carr & Co by your side, you can make the most of the opportunities this dynamic market offers.
How Clarice Carr & Co Can Help
Navigating the complexities of the North East property market requires expertise, and that’s where Clarice Carr & Co can assist. Whether you’re a tenant, landlord, or investor, our tailored services are designed to meet your specific needs:
For Landlords: We provide professional property management and advice to help you maximise your rental yields while ensuring tenant satisfaction.
For Investors: Our market insights and guidance can help you identify lucrative opportunities and develop a long-term strategy for sustainable growth.
For Tenants: We simplify the rental process, connecting you with properties that suit your budget and lifestyle, even as the market evolves.
With a deep understanding of the local market and a commitment to excellence, Clarice Carr & Co is your trusted partner in navigating the future of North East rent rises.
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