Despite expectations that the uncertainty created by Brexit and the COVID-19 pandemic would have a negative impact on demand and house prices, the UK property market continued to thrive throughout 2020 and into 2021. With a record rise in house prices last year along with the stamp duty holiday introduced by the UK government, demand for UK property continues to grow without any indication of slowing down.
With so many attractive investment hotspots appearing across the country, many investors are now asking – where is the best place to invest in property in the UK? In this guide, we explore the 10 best locations to buy a property in the UK and give you an overview of what makes each city a great place for property investment.
Often referred to as the ‘capital of the North’, the metropolitan city of Manchester is fast emerging as one of the best locations for property investment in the UK. With a growing population of over 2.5 million, the northern powerhouse is a popular location for businesses, with many relocating their headquarters to the city to escape the higher costs associated with London.
A significant contributor to the UK economy with employment growth of over 84% since 2002, Manchester is an extremely popular alternative to London for many young professionals, creating plenty of demand for high-quality, serviced apartments. In addition, Manchester is also home to four universities, attracting over 99,000 students in total each year, 19,000 of which are international. With a growing demand for higher living standards than what university-owned accommodation offers, Manchester is one of the best locations in the UK for student property investment.
Following the completion of the HS2 and the Great North Rail Project, the Greater Manchester region will boast impressive transport infrastructure and provide excellent transport links to the South, as well as other key cities in the North and Midlands.
With high capital appreciation returns over the previous five years, this trend of impressive growth looks set to continue as property prices in Manchester are expected to rise by 17.1% in the next five years. It is also projected that demand for rental housing will increase by 16.5% by 2025, and with an average rental yield of 5.5%, it is understandably a popular location for buy-to-let property investments.
London has long been regarded as one of the most desirable investment locations in the UK. With some of the most sought after property in the world and over 8.9 million residents, this popular investment location doesn’t look like slowing down any time soon. London is home to some of the biggest businesses in the UK and boasts fantastic international connections; creating a huge vacuum of demand for premium housing all across the capital.
London is a true economic rock that has grown exponentially over the last century. With the UK’s continuous investment in transport links such as Crossrail and HS2 to bring it closer to the other major cities across the UK, the capital is expecting to see an even further boost in economic prosperity and capital appreciation levels.
The key when investing in property in London is to find the right areas. Whilst it is the most expensive city in the UK for property, there are some more affordable areas such as Ilford, Romford, Barking, Dagenham, Harlington, and Thamesmead that are all considered to be areas of future growth. It is expected that East London in particular will see the biggest growth in the property market over the next five years.
While property in London can come at a premium, the capital’s global hub status, along with continuous stability and popularity make it one of the safest places to buy an investment property, not just in the UK, but in the world. With property prices set to increase 4% over the next five years, property in London makes a great investment opportunity simply from a capital appreciation point of view, but the high average rental yield of 6.2% is also evidence of lucrative short-term financial returns by investing in the capital.
Liverpool is quickly becoming one of the UK’s most envied cities. Home to beautiful architecture, large universities, world-class music and sport, the growing popularity of the city amongst students, professionals, families, and tourists is reflected in the strong local economy, as well as the significant increase in property investment over the last 10 years.
With over 60,000 students each year, Liverpool is naturally a great location for investment opportunities in student property, but don’t think that makes it just another student property hub; Liverpool has seen a marked increase in private-sector jobs over the past decade and resident earnings are significantly higher than in other major UK cities. With Liverpool being central to the UK government’s Northern Powerhouse ambitions, it is understandably a popular location for ambitious property investors.
Liverpool’s affordability when compared to the South makes it one of the best locations for property investment, and with billions being spent on regeneration projects, demand for rental housing has skyrocketed in recent years. Liverpool’s affordability is reflected in its excellent income to house price ratio which sits at 4.9, highlighting the relatively low cost of housing when measured against the strength of its workforce.
It is projected that property prices in Liverpool will rise by 13.1% over the next five years, and this high rate of capital appreciation along with the affordability of houses in Liverpool make it an attractive investment location for investors of all levels. With several streams of high-yielding investment opportunities averaging at 5.05%, Liverpool is a safe and affordable investment with high returns for those looking to get into buy-to-let, student property, as well as hotel room investments.
As the 8th most populous city in the UK, and a key component of the Northern Powerhouse initiatives, Newcastle is quickly up and coming as one of the best property investment locations in the UK. With rapid economic growth, a beautiful city centre, and rich cultural heritage, there are plenty of reasons why many investors are looking up to the northern city for property investment.
Unlike the other northern cities of Manchester and Liverpool, Newcastle’s property investment market has yet to see a rapid spike of growth, making it a more affordable prospect for investors and a great opportunity to get ahead of the trend and enjoy high capital appreciation and some of the highest rental yields in the UK reaching up to 10%. With Oxford economics predicting nearly 10,000 new jobs to be created in Newcastle in the coming decade, many expect that investment in Newcastle will follow a similar path to the thriving property market in Liverpool.
As well as having a strong international presence as part of Eurocities, the European network of major cities, the city has a robust, modern economy, built around corporate headquarters, learning, digital technology, retail, tourism and cultural centres. As well as being a significant contributor to UK business, Newcastle is a popular tourist destination, attracting over 36 million visitors daily. The thriving student population in Newcastle thanks to its esteemed university has created a huge demand for purpose-built student accommodation, making it a safe, yet lucrative student property investment location.
It is projected that property appreciation will see house prices in Newcastle rise by 6.2% over the next 5 years, and with some of the most affordable housing in the UK seeing impressive average rental yields of 6.5%, Newcastle should be on the radar of any property investor looking for their next opportunity.
As one of the fastest-growing cities in the UK, Sheffield is renowned for its low property prices, booming business sector, and provides a lucrative opportunity for investors looking to put their money into UK property. The district of Sheffield is already home to over 1,600,000 people and sees a high annual population growth of 6,300, guaranteeing the necessity of housing investment and demand in the area for years to come.
Over the past 20 years, Sheffield has seen impressive economic growth (60% increase in gross value added since 1997), and with a surge in redevelopment in the shopping district, as well as City Lofts Tower, St Paul’s Place, Velocity Living, and the Moor redevelopment, demand for housing looks set to remain on the up. The two universities in Sheffield also significantly contribute to the high demand for housing, bringing in around 60,000 students each year making it a perfect location for student property investment prospects.
Despite being a few years behind the other northern property markets of Manchester and Liverpool, Sheffield has a bright future ahead if the market continues on the same path, with especially lucrative opportunities for those who get in early. Investors can expect to receive average rental yields of 5% in Sheffield, with house prices in the city looking set to increase by 11.41% over the next 5 years.
The UK’s second-largest city, Birmingham looks set to continue as one of the best property investment locations in the UK, a trend in which it has outperformed the rest of the UK since 2016. Birmingham is the base for several large corporations including Deutsche Bank, KPMG, PricewaterhouseCoopers and DLA Piper, and investments in transport and infrastructure including HS2 are indicative of further growth and prosperity in the city of over 1.1 million.
One of Birmingham’s biggest draws for property investors is its affordability, with research showing that the average income to property price ratio is much higher than the majority of the UK. This shows that the city is attracting and retaining skilled workers with high levels of disposable income. This ever-growing popularity has led to predictions that the city will need nearly 100,000 new houses within the next decade to keep up with demand.
Average rents have seen a rapid rise of 30% over the last 10 years, and they are predicted to increase by a further 15.9% by 2025 as more and more young professionals look to swap London for Birmingham. Buy-to-let investors in Birmingham can expect to see a 5.4% average rental yield alongside a healthy 14.2% capital appreciation rate over the next five years.
Nottingham is quickly emerging as a hugely popular and more affordable option than other major cities such as Manchester and Birmingham for renters and investors alike. With its trendy city centre hosting an array of amenities and retail offerings, bars and restaurants, as well as the famous Lace Market, Nottingham is hugely popular with professionals and students, bringing the opportunity for strong rental yields with them in the process.
Another one of Nottingham’s major strengths is its central location, providing direct access to many key destinations and attracting many creative businesses that attract graduates to base themselves in the affordable city centre.
The two universities in Nottingham are relatively close to the center, creating a huge tenant demand in the high yield postcodes of NG1 and NG7 where investors can expect to generate yields as high as 9%, with an average of 4.66% for the whole city. Property prices are also expected to rise by an encouraging 16.92% making Nottingham one of the best locations for capital appreciation in the UK.
Another city in the North that has been identified as a key location for investors is Leeds. The West Yorkshire city is home to over 800,000 people, and with 73% of households currently renting, Leeds is the perfect place for buy-to-let investors looking for consistently high tenant demand.
With capital growth of 9.4% expected in the next 5 years, and impressive average rental yields of 5.1%, Leeds is perfect for investors seeking long-term rental returns. With its popular universities and booming local economy, it is no surprise that Leeds is one of the fastest-growing cities in the country and attracts nearly 10% of those leaving London each year since 2018.
Having seen consistent price growth over the previous decade, Edinburgh remains a firm favourite with property investors. Whilst average rental yields have slowed in recent years due to increasing prices, they remain at a healthy 4.19%, and the low tenant turnover rate makes it an ideal location for investment properties.
Edinburgh’s strong economy is reflected in projections of an impressive 17.1% increase in property prices over the next five years, making it popular with investors prioritising high rates of capital appreciation over yields.
Given the success of Edinburgh, it’s easy to overlook Glasgow as an investment location, but Scotland’s “second city” is seeing equally impressive economic growth that is being translated to its property market. It is expected that house prices will increase by 15.4% over the next 5 years, with demand for rental property set to increase by 13.4% over the same period, and with an average rental yield of 5.2%, investors can expect to make a healthy return on their investment.
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