Wednesday, 12 November 2014

Investors Guide to Sunderland (SR6)

The SR6 postcode covering the area north of the River Wear is often thought to be one of the most sought after areas to live in Sunderland - but do properties here also stack up as good investments?

Historically the SR6 postcode has been perceived to be an 'Owner-Occupier' area, and it must be said the statistics do bear this out somewhat. Owned Homes (both owned outright and with a mortgage) in the Fulwell and St Peters Wards that make up most of the SR6 postcode represent 77% of the total housing stock

Interestingly, and fitting with the perception that the area may have a more older occupants than most, 40% of all properties are owned outright

Overall this means that there are fewer properties available to be rented privately - this fits with our experience in that private rented properties are relatively scarce in this area, which is good news for Landlords with decent rented properties to supply the evident demand 

Only 6.9% of properties in the Fulwell Ward are privately rented (compare that to Sunderland as a whole where 10.9% of all homes are privately rented) but interestingly a much higher percentage (20%) of all homes in the St Peters Ward are privately rented - likely to correspond to the relative lack of social rented accommodation in the Ward (making up only 8.4% of the housing stock compared to 27% in Sunderland as a whole)

It's likely that the above figures are heavily skewed by accommodation rented to students wishing to be near the Sunderland University St Peters campus

Looking at property types, semi-detached homes are most common in the area with 45% of all properties being this type. By far the least common are detached homes representing only 4% of the total housing stock. Flats represent only 5% of all housing stock in Fulwell and 29% in St Peters

House prices in the SR6 area are significantly higher than in Sunderland as a whole - for example the average price of a 2 bedroom property is £126,600 compared to an average of £86,600 in Sunderland as a whole, similarly at £162,800 3 bedroom properties in SR6 are 45% higher than the Sunderland average

This is to be expected, given average earnings in the SR6 area are £23,674 which is 27% higher than the Sunderland average earnings. A useful tool for comparing one area against another is the house price/earnings ratio which shows at 6.87 SR6 properties are less affordable than in Sunderland as a whole (which has a price/earnings ratio of 6.19) but still relatively affordable compared to the 10.2 national average

Looking at market trends, house prices in the SR6 area have risen by 6.48% in the last 12 months, which is close to the national average growth rate, however over the past 5 years values in SR6 are still 7.6% down vs. a national 5 year increase of 6.84%

The positive to take out of this is that there's clearly still room for capital growth in the area

So, what should landlords look for if they are considering investing in SR6?

There are a few obvious choices, however given the above, investors looking to SR6 must do so in the knowledge that due to the higher-than-average prices they're unlikely to achieve the same yields as in other parts of Sunderland

That said, for those looking to balance yield with capital growth potential or for those who are more concerned with renting the sort of property 'they would live in', SR6 does offer a number of options

Tenant demand from the student market (and in particular the International Student market) is currently strong due to the wish to be close to the St Peters Campus

Students are increasingly favouring small, self contained units or flats (rather than the traditional large shared houses) so a couple of options in SR6 close to the St Peters Campus would be to consider the 1960's flats in Howick Park or the modern Bonners Raff development built in 2004

A one bedroom ground floor flat in Howick Park is currently for sale priced at £55,000. It will return 8.6% Gross Yield based on £395pcm rent (but you'd need to factor in service charges, it being Leasehold)

Alternatively, there are bargains to be had in the nearby Bonners Raff development. Just as with other apartment blocks built in the 2000's, many were bought at hugely inflated prices and there is often the chance to pick up a bargain if the owner is forced into a distressed sale. 

Bonners Raff will appeal to both students and professionals and in our opinion this development is a cut above other similar blocks in terms of design, accommodation size, with a range of accommodation types to suit all budgets from quirky studios to stylish 2 and 3 bed duplex apartments - in our experience they are a joy to let

There's a 1 bedroom apartment currently for sale at OIRO £75,000 which will return 7.9% Gross Yield based on £495pcm rent or a number of 2 bedroom apartments from £110,000 which will all return in excess of 6% Gross Yield

For those wishing to rent to families, given the scarcity of good quality private rented family homes in the SR6 area we'd recommend they looked at a two or three bedroom terrace or semi

This 3 bedroom semi on Fulwell road is 'Ready to Let' and at £119,950 (reduced from £124,950) will return 5.9% Gross Yield based on £595pcm rent

Alternatively, this traditional 2 bedroom semi in a quiet & sought after Fulwell street is on the market for £125,000 - it needs work but having improved the property (working on a budget of around £20k to do so) it will return 5.4% Gross Yield 

There are good long term investments to be made in the SR6 area but in our experience, given the above it may not be for all Landlords and we'd be happy to have a more detailed discussion about your investment needs to work out what area & property type is right for you

We'd always recommend getting objective, impartial advice before making any investment decisions so if you'd like to discuss the Sunderland property market in more depth feel free to call into our Frederick Street office, give us a call on 0191 567 8577 or email

No comments:

Post a Comment