Wednesday, 17 June 2015

Sunderland Sold Prices Were Only 17% Lower Than London in 1995...How Things Have Changed!

Looking at the recent post showing the variations in Sunderland sold prices since 1995 we can see that Sunderland property prices have hardly gone up at all the last few years and are a million miles away from achieving the double digit growth levels that are being achieved in Greater London

The rate of house price inflation in Sunderland continues to show very little growth, with the average price of a property sold in Sunderland in the 12 months to April 2015 only 1.5% higher than in the previous 12 months, according to the latest Land Registry data



Looking at the longer term picture, the Sunderland property sales market continues to be very flat, with the average sold price of £137,650 in April 2015 being only 0.88% higher than 3 years ago in April 2012 and as the above graph shows, actually 10.7% lower than in the 12 months up to April 2010

Looking at the graph above, it's startling to note that in January 1995 the average price of a property sold in Greater London was £93,682 - this was only 17.3% higher than the average price of £79,880 in Sunderland 

Now the average London property sold price is £483,643 - that's over 350% higher than the average sold price in Sunderland

Sunderland has seen an encouraging uplift in the number of properties sold throughout the last 12 months as demand for housing grows, which suggests more significant house price growth in the City may follow in due course

Since the Second World War in the UK, observers have consistently noted that when the number of properties sold increases, property values grow soon after

With this in mind the 8% uplift in property transactions in Sunderland for the year up to February 2015 indicates that more significant house price increases, in line with what's being experienced elsewhere in the UK, may soon follow

When you compare Sunderland with London, you could be looking at two different countries

In London, price to earnings ratios are impacting on demand - the average property value is often 15 or 17 times the average wage in London...in fact, in Knightsbridge the ratio can be 30 to 1 

In Sunderland this ratio is a much more affordable 5.7 to 1 (click here for an interesting Daily Telegraph article reporting that Sunderland has the second lowest average salary in the UK at £24,072)

That said, the number of people wanting to sell in Greater London has dropped considerably in recent months, meaning that falling sales volumes combined with a general slowdown in activity in the run up to the General Election have resulted in lower mortgage approvals for home purchases

The acceleration in house price growth in London in the last two years was preceded by three years of rising transactions

As we see above, a similar pattern is being registered in the Sunderland area, as pent up demand slowly returns to the market supported by low mortgage rates and an improving economic outlook

But before you get the Champagne (or even the Prosecco) out, while the uplift in activity is welcome news, the number of Sunderland property sales in the year to February 2015 is still 43.6% lower than the level seen in 2007 and property values are 22.7% below 2007 levels

The ongoing housing recovery is far from broad based and remains focused on middle to higher value areas within Sunderland where households have equity and find it easier to access mortgage finance

What this means is that investors with access to finance looking to purchase rental properties in the core 'upto £100,000' bracket can take advantage of market conditions and negotiate hard to pick up bargain properties that may deliver better-than-average capital growth

If you want to know more about the Sunderland property market, please don't hesitate to contact me on 0191 567 8577, email neil.whitfield@belvoirlettings.com or pop into our office in Frederick Street

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