The UK's Property Investment Black Spots Revealed

Home.co.uk Highlights the 20 Worst Places to Invest in Property

The UK's property investment black spots have been revealed, further highlighting the fact that home prices are falling in some areas.

Latest research by Home.co.uk shows that property prices in some of the worst performing areas are falling by more than 7% per year. Landlords' return on investment is also on the slide, with 11 locations recording negative real % 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.

The worst 20 places to invest in property

Location Average 2-bedroom property price Sep 2014 Average 2-bedroom property price Sep 2013 12-month % price change Real % yield Sep 2014
Belgravia 2,089,484 2,262,781 -7.6% -4.4%
Hartlepool 86,921 93,983 -7.5% -1.7%
Poole 244,424 263,105 -7.1% -2.5%
Salford 161,713 173,727 -6.9% -0.9%
Soho 1,817,965 1,951,512 -6.8% -3.5%
Halifax 92,765 99,226 -6.5% -0.6%
North Shields 105,815 113,062 -6.4% -1.0%
Margate 168,885 179,685 -6.0% -2.1%
Plymouth 142,046 150,655 -5.7% -0.4%
St Helens 81,880 86,645 -5.5% 0.9%
Burnley 72,568 76,578 -5.2% 1.1%
Westminster 1,434,577 1,513,420 -5.2% -1.8%
Stockton On Tees 90,493 95,296 -5.0% 1.2%
Stalybridge 99,386 104,558 -4.9% 0.8%
Middlesbrough 91,567 95,991 -4.6% 1.4%
Strand 1,603,105 1,663,421 -3.6% -0.4%
Gateshead 116,191 120,017 -3.1% 3.2%
Rochdale 87,940 90,699 -3.0% 3.2%
Newcastle upon Tyne 113,935 117,292 -2.8% 3.5%
South Shields 103,054 105,942 -2.7% 2.8%

Prime London boroughs feature prominently in Home.co.uk's 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% in annual house prices and the real % yield in the same month was -4.4%.

In Soho, another swanky London borough, property prices over the same period fell by 6.8% and the real yield for September was -3.5%. Meanwhile in Westminster, the annual property price fall recorded in September was -5.2%, with landlords facing a real yield of -1.8%.

Seaside towns are another casualty of the cooling property market. Prices have fallen by 7.1% over the 12 months to September in Poole, Dorset, where the real yield for landlords is -2.5%. In Margate, property prices fell by 6% over the same period and the real yield was -2.1% in September.

Towns and cities in the North East of England have also been badly affected as austerity measures and joblessness continue to bite. Property price falls in the 12 months to September have been recorded in Newcastle upon Tyne, South Shields, Gateshead, Middlesbrough, North Shields, Hartlepool and Stockton on Tees. Of these, the coastal town of Hartlepool has suffered the most, with annual property prices dipping by 7.5% and the real yield for landlords standing at -1.8% in September.

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% between September and October this year, and Wales saw the biggest monthly slump over the same period, of 0.4%. Meanwhile, despite falling prices in central London, London and East Anglia both saw rises in average property prices of 1.1% between September and October.

Outside of such property hotspots, vendors' expectations are clearly being moderated. The total number of properties that are on the market at a reduced price has risen to a two-year high and now represents 13% of the total stock of property for sale.

Home.co.uk director Doug Shephard commented:

"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."

Source: Home.co.uk Home Asking Price Index.

Notes for Editors

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