Investors located in the northern regions of the country also continue to benefit from higher average total returns than those in the South.
Prices paid by northern landlords for their property investment acquisitions have risen this month to reach respective averages of £95,228 and £131,892. Property values in the North West have risen steadily since September, yet this is the first time since July that they have risen in the North.
Property values also rose steadily in East Anglia over the last quarter, to reach £148,704 in November. Smaller increases were also seen in the East Midlands and the South East.
As well as seeing high levels of capital appreciation, northern regions generally continue to register rather better yields than more southerly ones: this month the West Midlands was highest yielding region at 7.0 per cent, followed by the North (6.9 per cent) and Yorkshire (6.9 per cent).
Indeed, the month saw an increase in yield in the West Midlands, the North, Yorkshire and Greater London, but saw an easing in the other regions. As a result, average yields slipped very slightly across the country.
John Heron, managing director of Paragon Mortgages, commented: “Yields seem to have remained relatively stable in the past quarter. This is clearly good news for landlords with existing property investments or who are considering increasing the size of their portfolios.”
In terms of total return the North and the North West are now generating the highest overall return at 31 per cent and 24 per cent. Wales follows closely behind at 20 per cent. Yorkshire and Wales have consistently held the top spots over recent months, yet have been overtaken due to the increase in property values and rental incomes across the northern regions.
Heron added: “As property values in northern areas have generally held up better than those in southern parts, so overall returns have remained stronger. Landlords in the North are still seeing total returns of over 30 per cent, compared to a much lower national average of 7.6 per cent.”
He concluded: “This month’s figures show a distinct north-south divide. Total returns, property values and yields are mostly higher in northern regions, most notably the North, while southern regions continue to see a modest decline in property values and yields. Having said that, confidence among landlords remains sound and they continue to be cautious buyers as and when they identify suitable properties that meet tenant demand.”
