Why the North East of England is becoming one of the most lucrative areas to invest in property.

The North East of England is rapidly becoming one of the most sought after areas in the country for property investors who are looking for both short-term and long-term investments and here is why:

Expected Capital Appreciation

Industry analysts suggest that the region will see the highest capital growth in the UK over the next fiver years, with Savills suggesting an increase in capital value of over 26%:

As shown above the region’s growth is above the UK average, which further demonstrates the lucrative potential for investors to make significant and sustained return on investment.

Extensive Regeneration Projects

Major cities within the region are currently undergoing massive regeneration projects. Cities like Sunderland with its Riverside Project, and Newcastle with its Helix investment – and not forgetting the potential new stadium being built and regeneration of the surrounding area – are bringing significant job opportunities to the North East, which in turn has created an increased demand for housing and more competitive rental rates.

It isn’t just the big cities that are taking all the credit however, smaller towns such as Hartlepool, Middlesbrough, and Billingham, are ramping up their efforts to make themselves more appealing to potential investment. Much of Hartlepool’s water front has been regenerated, with a multi-million pound leisure centre being built as well as commercial units which has created a vibrant and diverse space on the water front. The significant efforts to reopen and expand Teesside Airport have also created a huge increase in job opportunities, as well as putting Teesside back on the map for tourism and business. There is also the opening of Fujifilm’s £100m pharmaceutical facility in Billingham, which has brought a huge increase in jobs as well as a significant increase in housing demand and value.

Strong Economic Growth

As referenced above, the region has seen a huge rise in investment and job opportunities being created. Of this investment there has been an emphasis on technology and renewable energy. The North East is actually now considered to be the leading region in renewable energy, with off-shore and on-shore wind, and solar farms being built across the region and along its coast. The emphasis on these sectors can give investors the knowledge and peace of mind that not only are these investments here in the now, but are also going to be there for the future, continuing to create job opportunities and investment in the region as we move towards a renewable future and contributing the government’s net zero policy.

With companies such as Nissan, BritishVolt, Greenergy, Sabic, Venator, and Fujifilm committing themselves to the region, they have provided the region with a strong economic foundation as well as a strong housing demand.

High Rental Yields

As an investment opportunity, the North East benefits massively from relatively low house prices. As a result of this the average net yields for single-let properties are around the 7% mark. If that was to be compared to the London and South East region, it is around double – with the net yields in those areas sitting at around 3-4%.

In places such as Newcastle, Sunderland, Durham, and Hartlepool, there is the added bonus of having academic institutions which allows the rental markets to thrive, particularly among students and young professionals.

See below, as per Savills, the expected rental values forecast up until 2029:

As you can see with increases of almost 20% to rental growth, securing low cost properties will allow investors to maximise their net income for as long as interest rates continue to fall (and they are expected to fall further at the time of writing this), the gap between the mortgage payments and rental income will grow year on year.

Why now is the right time to invest in the North East

The key to any successful investment is managing to get a good return on the money you put in.

It is our firm belief at New Street Properties, that this is massively possible within the region.  The North East is in a unique position whereby the property prices have remained low, but almost all growth indicators suggest a significant rise in the coming years. Investment in the region now will ensure that investors can get a significant return on investment, both short and long-term, through high rental yields and capital appreciation as demand continues to rise.