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Onwards and upwards in northern property investment

31st August 2005 | back to article listings BACK    print this article PRINT

The onwards and upwards returns of property investment in the north of England, particularly the heartlands of Yorkshire, has continued apace says the August issue of buy- to-let mortgage specialist Paragon's buy-to-let index.

The area has achieved the rare trick of booming rent yields – up 36.7 per cent since July 2004, to £10,495 – and a dramatically increased return on property investment capital yields, increased by 38.6 per cent over the period to an average £143,684.

Despite the large increase in property values, Yorkshire remains one of the highest yielding regions in the country, at 7.3 per cent. John Heron, managing director of Paragon said that a large concentration of student centres in the region, in Sheffield, Hull, Leeds and York, among others, played a large role in the booming markets.

Many of these would also graduate from their shared houses to more upmarket properties in the region once they had completed their studies, he added. "An important demographic trend that has sustained the growth of the private rented sector over the past decade or so has been the tendency for young people to leave the family home at a fairly young age to go on to further education and not return.

"In addition, there has been a net influx of jobs in some parts of Yorkshire which has helped create a requirement for more rented homes," he said. The key source of growth was a strong and diverse influx of demand, ha added.

The north west region has also delivered rich returns on property investment, despite a slight decline in rents this month. Rental incomes in the region have risen by almost 30 per cent and property values by more than 34 per cent since July 2004. Yields in the region, at just under seven per cent, remain above the national average of 6.7 per cent and are equivalent to the south west and east Anglia.

Across the country, rental incomes increased by 2.8 per cent this month and now stand at £10,835, the largest monthly increase in rental incomes since November 2004. Terraced and semi detached properties saw values increase by eight per cent and 7.7 per cent, while the top bracket of detached properties fell 5.9 per cent and flats, said by some to currently be over represented in some areas, fell 0.4 per cent.

"With good returns on their property investment and strong levels of capital appreciation over the past year, landlords continue to benefit from good overall returns — taking into account both rental income and capital appreciation, said Mr Heron.

"Overall returns have now reached 22 per cent, up from 21 per cent last month and a low of 18 per cent in April this year."

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