Newcastle Property Owners Reap £5,277 Yearly Gains Since 2001

As we are now nicely into 2024, it's certain the Newcastle housing market over the last 18 months has been a little more restrained than 2020, 2021 and early 2022, and I believe that the ‘steady as she goes’ outlook will continue into the rest of 2024 and beyond.

As property ownership is a medium to long-term investment, it is important to see what has happened to Newcastle house prices.

Since the start of the Millennium (Jan 2001), the average Newcastle homeowner has seen their property’s value rise by an average of 196%.

This is important as house prices are a national obsession and tied into the health of the UK economy as a whole. Most of that gain has come from the overall growth in Newcastle property values, while some of it will have been enhanced by extending, modernising or developing their Newcastle home.

Taking a look at the different types of property in Newcastle and the profit made by each type, it makes interesting reading:

• Overall Average For All Homes in Newcastle. The average price of all homes in Newcastle in 2001 was £63,778. Now it's 2024, and it has risen to £185,157. This is a total profit of £121,379 (which is £5,277 profit per year per home or an annual growth of 8.5% per year).
• Apartments in Newcastle. The average price of an apartment in Newcastle in 2001 was £48,855. Now it's 2024, and it has risen to £122,463. This is a total profit of £73,608 (which is £3,200 profit per year per home or an annual growth of 6.7% per year).
• Terraced/Town Houses in Newcastle. The average price of a terraced/town house in Newcastle in 2001 was £58,483. Now it's 2024, and it has risen to £159,702. This is a total profit of £101,219 (which is £4,401 profit per year per home or an annual growth of 7.5% per year).
• Semi-Detached Homes in Newcastle. The average price of a semi-detached home in Newcastle in 2001 was £60,909. Now it's 2024, and it has risen to £224,503. This is a total profit of £163,594 (which is £7,113 profit per year per home or an annual growth of 11.8% per year).
• Detached Homes in Newcastle. The average price of a detached home in Newcastle in 2001 was £125,969. Now it's 2024, and it has risen to £332,465. This is a total profit of £206,496 (which is £8,978 profit per year per home or an annual growth of 7.1% per year).

However, we can’t forget there has been 79% inflation over those 23 years, which eats into the ‘real’ value (or true spending power of that profit) … so if we take into account inflation since 2001, the true ‘spending power’ of that profit has been lower.

• Overall Average For All Homes in Newcastle. The total 'real profit' (i.e., after inflation has been removed) for the average Newcastle home is £67,545 for the last 23 years. This equates to £2,937 'real' profit per annum.
• Newcastle Apartments. The total 'real profit' (i.e., after inflation has been removed) for the average Newcastle apartment is £40,962 for the last 23 years. This equates to £1,781 'real' profit per annum.
• Newcastle Terraced/Town Houses. The total 'real profit' (i.e., after inflation has been removed) for the average Newcastle terraced/town house is £56,327 for the last 23 years. This equates to £2,449 'real' profit per annum.
• Newcastle Semi-Detached Homes. The total 'real profit' (i.e., after inflation has been removed) for the average Newcastle semi-detached home is £91,037 for the last 23 years. This equates to £3,958 'real' profit per annum.
• Newcastle Detached Homes. The total 'real profit' (i.e., after inflation has been removed) for the average Newcastle detached home is £114,912 for the last 23 years. This equates to £4,996 'real' profit per annum.

Thus, the annual profit for an average Newcastle home, adjusted for inflation, stands at £2,937.

I wanted to illustrate that despite the 2008/09 Credit Crunch property market crash, which saw Newcastle property values plummet by 15% to 20% over 18 months, homeowners in Newcastle have still fared better over the long term than those renting.

Looking ahead, a common question I get asked is about the future trajectory of the Newcastle property market.

The primary influence on maintaining house price growth in Newcastle over the medium to long term will be the construction of new homes locally and nationally. Although we have yet to get the figures for 2023, government sources indicate that the number of new households is expected to be between 210,000 and 220,000. Considering the annual need is for 300,000 new households to meet demands arising from factors such as immigration, increased life expectancy, higher divorce rates, and later cohabitation, it’s clear that demand will continue to outstrip supply unless the government heavily invests in building council houses.

This can only be good news for Newcastle homeowners.

What about Newcastle landlords, though?

Even though the number of landlords liquidating their property portfolios has increased in the last couple of years and the number of landlords buying is lower than in the 2000s and 2010s, there is still net growth in the size of the private rented sector each year. This is all despite facing higher taxes. The simple fact is many Newcastle landlords remain keen on expanding their portfolios in the long term.

The younger generation in Newcastle views renting as a choice that offers flexibility and alternatives that homeownership does not provide. This means that demand for rentals will keep growing, allowing landlords to enjoy rising rents and capital appreciation. However, Newcastle buy-to-let landlords must adopt more thoughtful strategies to maintain profitable returns from their investments.

As a Newcastle buy-to-let landlord, the question for you is how to ensure this growth continues.

Since the 1990s, generating profits from buy-to-let property investments was straightforward. Moving forward, with changes in the tax laws and the balance of power, achieving similar returns will be more effortful. Over the past decade, I've observed the evolution of agents from mere rent collectors to strategic portfolio managers. I, along with a select few agents in Newcastle, am adept at providing comprehensive, strategic portfolio leadership. This service offers a structured overview of your investment goals across short, medium and long-term horizons, focusing on your expected returns, yields and capital growth. If you seek such advice, feel free to contact your current agent or me directly at no cost or obligation.