"Lower rental yields in London and affordability constraints for investors has driven interest North, where borrowers are chasing the yield and heading to locations with lower average house prices."
Emma Cox, Sales Director for Commercial Mortgages
Whilst before, investors considered London as the best location to invest in property, we’re now seeing a significant change of interest. Those who want to produce high yields from rentals have found that the North West is the ideal place to be. This is excellent news for any Northern investors who want to keep things local, but why is this happening, and what is making the property market gain such momentum?
The North-South Divide
London may have been at the heart of property investment for many years, but the high-cost demands have seemingly produced attractive opportunities in other parts of the country too. The North-South divide is often referred to as the difference in property prices between the North and the South of the UK.
After the financial crisis, London property prices soared for almost a decade while the North rose by under 2%. However, North West house prices have been growing significantly over recent years, exceeding the rest of the UK, and it has been predicted that North West properties will grow faster than any other region in the next five years with a rise of 18% by 2022. Rental yields in the North West are also impressive figures to look at too. Liverpool and Manchester have rental yields of around 5% whereas London is only 3.05%.
A lot of investors have acknowledged the significant house price growth and above average rental yields since the start of 2019, and these attractive figures have meant more people are investing up North than down South. It seems as though the tables have turned here.
Despite the impact that Brexit negotiations have had on the UK property market, the gradual rise in interest rates along with new mortgage regulations are revolutionising the market for both investors and house-hunters alike. The North West is seeing a positive change in the market, and investors are merely embracing this change.
New Developments in City Centres
Recently, there has been a new focus in Northern city centres for regeneration and development, and this includes property development. Investors and landlords are diversifying their portfolios by focusing efforts on city centres and new residential buildings. These city centres have ideal transport links, increasing employment levels and access to local services. The likes of property investment companies such as RW Invest have contributed significantly to the development of Northern cities, Liverpool and Manchester.
With the figures predicted to rise, there hasn’t ever been a better time to invest in a new development, even if you’re new to investing. The latest developments have particular interest from young professionals flocking to the cities for exciting, new opportunities. The demand for city centres and properties within them are guaranteed to secure capital growth and high yields, which is a win for any investor.
House Prices are Increasing
Even outside of the city centre, Northern property prices are increasing. The average price in the North West as of May 2019 is just over £198,000, which is an annual change of 2.1% whereas Greater London prices have had a yearly change of -2.5%. The increase has been consistent every month for two years, with an average of 0.7% growth. With figures like these, it’s no wonder that investors are thriving in the North West property market.
Student Accommodation is Thriving
There are countless Northern cities with vibrant student populations, and with Liverpool and Manchester being some of the biggest student cities, it’s no wonder that investors choose student accommodation developments over anything else. Experts are predicting that in 2019 into 2020, the student property market will dominate all other sectors.
The University of Manchester is the 2nd most populated University in the country with over 40,000 students enrolled. Over the North West, 12 universities total around 230,000 students in the region. It’s a huge market right now and seems to be thriving as universities climb the league tables resulting in more enrolment. Student accommodation is an ideal market for investors who prefer rentals with high-profit margins as there is continuous availability of tenants. Students will live in accommodation for a few years, and as they move on, more will inquire about the property.
The news bodes well with those who are wanting to invest in property in the North West as there couldn’t possibly be a better time to do so than right now.
If you’re looking to invest in residential or student buy to let properties, speak to an expert about it before you do. It can be an exciting and prosperous journey with the right property investment company by your side.
