Landlords who raced to invest in the North East will be hit by £14,000 house price falls next year as the cost of living crisis hammers Britain’s buy-to-let heartland.

House prices in the North East will fall at the fastest rate in the country next year, down 9.1pc, according to a forecast by the Centre for Economics and Business Research, an analyst.

On a typical £155,000 property, this will be equivalent to a loss of £14,105.

The expected 9.1pc house price fall will be nearly three times the 3.4pc drop CEBR has forecast for the UK as a whole next year, as inflation, rising interest rates and an expected recession hit the market.

Landlords who have chased high rental yields in the North will be hit hard. The price drop was forecast just as the buy-to-let investor share in the North East hit its highest level on record since 2012, according to Hamptons estate agents, which analysed data from Countrywide, Britain’s largest property group.

In the year to date, landlords accounted for 26.2pc of all sales in the region, a jump from 15.2pc in 2019. This was the highest share in the country and more than double the national landlord buyer share of 12.7pc. 

David Fell, of Hamptons, said: “This is essentially a product of landlords chasing yields up north and buying into the end of the house price growth cycle.”

The North West will record the second largest regional price drop in the country, with values falling 6.7pc in 2023. In Yorkshire and the Humber, prices will plunge by 6.6pc. The respective landlord buyer shares here are 16.9pc and 15.5pc.

In the North West, an average £209,000 property will lose £14,003 in value. In Yorkshire and the Humber, the fall in value will be on average £13,319.

Interest rate rises, which are making mortgages much more expensive, are key. Since the Bank of England made its fifth consecutive rate rise in June, CEBR downgraded its house price forecast for the North East from falls of 6.6pc to 9.1pc.

The biggest house price falls will be concentrated in the North because these areas recorded some of the highest house price growth during the pandemic.

In 2021, house prices in the North East, North West and Yorkshire and the Humber rose by 10.4pc, 11.5pc and 10.2pc respectively, well above the national average growth rate of 9.4pc.

By contrast, in London, where house price lagged at 4.1pc during the pandemic, CEBR has forecast 1.5pc growth next year.