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Thursday, October 7, 2010

Darras Hall affected by property price plunge

THE impact of the economic downturn on North East property prices is revealed today, with homes in some of the regions most desirable postcodes plunging by up to 45%, while those elsewhere have held their value.

An investigation by The Journal has revealed how some householders have been forced to reduce their asking prices to more realistic levels.

One of the most affected areas identified by estate agents is the exclusive Darras Hall estate in Ponteland, Northumberland, where many have seen hundreds of thousands of pounds taken off the value they put on their homes.

The problems in Darras Hall are being partly blamed on the fact fewer Premier League footballers and other high earners are buying houses there.

In contrast, other parts of the region including Jesmond, parts of Durham City, and more rural areas such as the Tyne Valley, and Sedgefield, in County Durham, have managed to retain higher values.

Experts say the pattern of property prices has followed the money. As higher-earning entrepreneurs and manufacturers have been forced to rein in their spending, many have looked to downsize, making more executive homes available to the market, and decreasing their value.

Letting agents say more top-flight footballers, from both Sunderland and Newcastle United, are also choosing to rent instead of buy as they see their time in the region as more transient.

Longer established desirable neighbourhoods, such as Gosforth in Newcastle, have been insulated from a price slump by demand from top earners in the public sector.

Experts believe this is in part driven by medical professionals, who choose to live closer to the hospitals where they work.
Planning restrictions in rural areas have also meant supply for aspirational properties in the countryside has been starved, helping to preserve values in areas such as Corbridge and Hexham.
According to last weeks Nationwide house price index, the average house in the North East fell in value by 1.2% in the last quarter, but is still worth 1% more than a year ago.
However, such figures disguise huge differences within the region with some neighbourhoods suffering big losses.

For example, so far this year Darras Halls Runnymede Road has realised an average sale price of s500,000 less than in 2004, dropping from s1.2m to s700,000, according to the property website

But Gosforths Graham Park Road last year recorded an average sale price of s1m, compared with s700,000, in 2005, an increase of s300,000. Last night, property bosses reassured buyers and sellers alike that the North East property market remains healthy, although they warned that the days of super-inflated prices in the region are at an end.
Duncan Young, managing director of estate agent Sanderson Young, which has a 70% share of the market for selling homes over s1m, said: Demand for homes in Darras Hall accelerated very quickly from the 1990s into the 2000s, as footballers and sportsmen started moving into the area.

It is still a wonderful neighbourhood and the demand is still there, but prices have fluctuated more. In Northumberland, agents say there has been a drop-off in the number of buyers looking at s1m-plus homes, while the very top end of the market has remained insulated.

Experts say this reflects the large cash wealth of investors looking to buy estates with multiple homes and land.

Partner at Strutt and Parker, in Northumberland, Simon Beeby, said: There has possibly been a drop-off in the number of people willing to spend over s1m, which would also come down to high-earners seeing their income affected by the economic conditions.

I think the reason you see such fluctuations in Darras Hall is because there is such a large concentration of expensive homes in one place, it becomes the microcosm of the bigger picture.
Neil Foster, managing director of Foster Maddison, said: It is important to remember average house prices can be affected by relatively few sales and, in my opinion, the market has remained more or less level over the last year.
Developers can increase the supply of new properties, but there are limited numbers of period and rural homes, due to planning limitations.
Valuers say Durham City has also performed well, with strong transport links making it an accessible option.

Source: Journal Live