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Writer's pictureRobin Lawson

Green Shoots for Residential Investment in the North East: A Positive Outlook for Property Investors

The UK property market is showing the first signs of recovery following a challenging period, with recent data indicating that residential investment in the North East is on the rise. While the national picture remains mixed, there are encouraging developments, particularly in regions like the North East, where a combination of lower property prices and promising growth potential is attracting renewed interest from investors.

Penshaw Monument in the North East, symbolising the region's cultural heritage and potential for residential investment in the North East.
 

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Investment Trends in the North East

In the first half of 2024, the UK property investment landscape faced a dip, with overall investment levels falling 25% below the 10-year average. However, as the market begins to stabilise, regions like the North East are emerging as potential hotspots for those interested in residential investment in the North East. According to recent reports, investment volumes in the North East have shown resilience, with the region seeing sustained interest from both domestic and international investors.

The North East, including key cities like Newcastle and Sunderland, has long been known for its affordable property prices compared to other parts of the UK. This affordability, combined with the region’s ongoing regeneration efforts, makes it an attractive option for investors seeking both rental income and long-term capital growth. Recent data shows that while London and the South East have seen significant declines in investment, residential investment in the North East has managed to maintain steady levels, reflecting confidence in the region’s future prospects.

The Rise of Serviced Accommodation and HMOs in the North East

A key trend contributing to the growth of residential investment in the North East is the increasing popularity of serviced accommodation and Houses in Multiple Occupation (HMOs). These investment strategies have become particularly attractive due to their potential for high rental yields and strong demand in urban areas.

Serviced Accommodation: In cities like Newcastle, the demand for serviced accommodation is on the rise, driven by the city’s appeal to both business travellers and tourists. Investors are increasingly turning to this model as it offers higher returns than traditional buy-to-let properties. The flexibility of short-term lets, coupled with the city’s vibrant cultural and economic scene, makes serviced accommodation a lucrative option for those looking to maximise their residential investment in the North East.

HMOs: Similarly, HMOs are gaining traction in the North East, especially in university towns and cities with a large population of young professionals. Newcastle, with its thriving student population, is an ideal location for HMO investments. HMOs typically offer higher rental yields compared to single-family rentals, as multiple tenants contribute to the overall income. This makes them an attractive choice for investors seeking steady cash flow and higher returns from their residential investment in the North East.

The Living Sector and Build to Rent in the North East

Beyond serviced accommodation and HMOs, the Living sector—which includes student accommodation, retirement homes, and Build to Rent (BTR) developments—continues to be a major driver of residential investment in the North East. Nationally, the Living sector accounted for 30% of total real estate investment in the first half of 2024, and this trend is mirrored in the North East, where demand for rental properties remains robust.

In Newcastle, the BTR market is expanding rapidly, with several new developments either under construction or in the planning stages. These projects are attracting significant interest from investors looking to tap into the region’s strong rental market, bolstered by a growing population of young professionals and students. The city’s vibrant cultural scene, coupled with its status as a hub for higher education, makes it a particularly attractive destination for those focused on residential investment in the North East.

North East Property Prices and Market Stability

Despite the broader economic challenges, property prices in the North East have remained relatively stable, with modest growth observed in recent months. According to data from Rightmove, the number of sales agreed in July 2024 was up 15% compared to the same period last year, indicating a revival in buyer activity. The Land Registry House Price Index also reported a 2.7% annual growth in June, reflecting a consistent upward trend in the region’s property market. This stability is a key factor driving residential investment in the North East.

This stability, coupled with the region’s affordability, positions the North East as a compelling option for investors. The combination of lower entry costs and the potential for capital appreciation makes it an ideal market for those looking to diversify their portfolios. Moreover, with interest rates showing signs of stabilising, the cost of borrowing is becoming more predictable, further encouraging residential investment in the North East.

The Outlook for Residential Investment in the North East

As the UK property market begins to recover from the uncertainty of recent years, the North East stands out as a region with significant potential for growth. The combination of affordable property prices, strong rental demand, and ongoing regeneration projects makes it an attractive destination for both domestic and international investors. While challenges remain, particularly in terms of construction costs and regulatory changes, the overall outlook for residential investment in the North East is positive.

For investors considering the North East, now may be the opportune time to explore the market. With property prices still relatively low and demand on the rise, the region offers a unique blend of stability and growth potential that is increasingly hard to find elsewhere in the UK. The rise of serviced accommodation and HMOs, in particular, adds to the region’s appeal, offering diverse investment opportunities that cater to different market segments.

 

About Clarice Carr & Co

At Clarice Carr & Co, we specialise in providing expert guidance to investors looking to capitalise on opportunities in the North East. With our deep knowledge of the local market and commitment to client success, we are well-positioned to help you navigate the evolving property landscape. Whether you’re interested in residential investment in the North East, commercial properties, Build to Rent, serviced accommodation, or HMOs, our team is here to support you every step of the way.

Want to know more? Check out our website or get in touch 

 

Frequently Asked Questions

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