Twenty of the United Kingdom’s property black spots have been revealed in research that also highlights how prices in some areas are now falling.
The report by real estate website Home.co.uk shows that property prices in some of the worst performing areas are falling by more than 7 percent per year. Landlords’ return on investment is also on the slide, with 11 locations recording negative real percentage yield, which occurs when the value of the property depreciates by more than the annual rent. Moreover, it’s not just the North that is suffering price falls.
Prime London boroughs feature prominently in the list of the top 20 property black spots. The figures for the 12 months to September this year show Belgravia has seen a slump of 7.6 percent in annual house prices and the real percentage yield in the same month was -4.4 percent.
In Soho, another swanky London borough, property prices over the same period fell by 6.8 percent and the real yield for September was -3.5 percent. Meanwhile in Westminster, the annual property price fall recorded in September was -5.2 percent, with landlords facing a real yield of -1.8 percent.
The figures show that, whilst overall the UK property market still has considerable momentum, property investments can suffer significant losses in certain locations, at least in the short term.
According to Home.co.uk‘s October Asking Price Index, property prices across the North East of England fell by 0.1 percent between September and October this year, and Wales saw the biggest monthly slump over the same period, of 0.4 percent. Meanwhile, despite falling prices in central London, London and East Anglia both saw rises in average property prices of 1.1 percent between September and October.
Home.co.uk’s Director Doug Shephard said: “Price falls in the super-rich suburbs of central London have come about for very different reasons to the falls observed in the North. Prices soared in central London post- financial crisis as foreign investors sought safe haven investments. Such was the demand for this type of premium property that prices overheated, reaching a peak last year, and are now in the throes of the painful process of market correction.
“By contrast, Hartlepool home prices fell hard following the financial crisis and price recovery has been elusive. In fact, price erosion continues in many such locations where supply seemingly continues to outweigh demand.”
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.
