Is Property A Good Investment In The UK? The Northern Powerhouse Is Creating New Property Investment Hotspots
A concept announced by former Chancellor George Osborne in 2014, the UK’s Northern Powerhouse and its population of over 15 million people has come a long way, steadily gathering pace as a collective force that could rival the economy in London and the South East. London used to be known as the hotspot for property investment, but new emerging locations are offering higher rental yields. This leads to the question, “where in the UK is property a good investment?”
Should I Invest In Property In the Northern Powerhouse?
The Northern Powerhouse was described by the Chancellor as “a collection of Northern cities sufficiently close to each other that combined they can take on the world.” The goal of bringing together Northern cities as one big collective is to level out the economic imbalance between the North and the South. By doing this, the UK’s economy is strengthened and not so heavily reliant on the capital.
Whilst much of London’s affluence comes from its financial services, the North and its economy shows off strong technology, science and manufacturing service sectors. There has also been a lot of money spent on regeneration in areas such as Manchester, Liverpool, Leeds, and Newcastle; with £3.4 billion allocated through growth deals, £70 million for schools, and £13 billion for transport.
The growing fast rail transport links between Northern cities and from the North to the South, such as the High Speed 2 (HS2) and the upcoming Northern Powerhouse Rail (NPR) has not only made travel times much shorter and more convenient, it also has the potential to create 850,000 new jobs.
Due to the massive funding and regeneration projects, there was an increase in the number of inward investment projects and that number is growing at twice the national average. One of the major investments taking place in the Northern Powerhouse is in the property sector.
How Is The Northern Powerhouse Changing The Meaning Of A High Yield Property Investment?
London has been the leader of the UK property investment market and has been able to attract investors from around the world for decades, but a combination of the massive housing under-supply and rising property prices have resulted in low NET yields of 4% – 5% on average and it can even be as low as 2% in Central London. As a result, investors and landlords have been looking elsewhere for long-term, high-yielding UK property investments.
The Northern Powerhouse strategy is creating more opportunities for economic growth, backed by billions of pounds in funding, which includes transport links within and between the North’s towns as well as high-speed train links to major cities across the UK from Leeds and Sheffield to Birmingham and London.
On top of this, there has been work done with the Northern areas to raise the education and skills levels, encouraging the Northern Powerhouse to be recognised as a worldwide opportunity for trade and investment. Not only does this mean there has been substantial growth in the area’s population, but it has also created more jobs and higher rental yields than the country’s capital.
Investing in a high yield property investment in the Northern Powerhouse could mean that you can easily get NET yields as high as 9% on a fully-managed student accommodation investment and even some buy-to-let investments.
The North vs The South Property Market
The property market across the UK differs from location to location and there has been a big North-South divide in terms of property prices for a few years. The HM Land Registry UK house price index found in September 2017 that the average price of a London home was £483,568, and average house price in the North West was £160,951.
Compared to figures recorded during the same time period in the previous year, London saw a 2.5% increase in house prices while the North West saw a 7.3% increase, which narrows the divide slightly.
Rightmove also found that there was a difference in the number of sales made in 2016-17. They stated that the properties in London and the South were more difficult to sell and agreed sales in this area went down by 9% and 7.9% respectively. In contrast agreed property sales in the North went down by only 3%, supporting the notion that investors are moving away from London and choosing to buy property in the North of the country.
Property Investment Hotspots in The North
Emerging locations for buy-to-let
Liverpool – Liverpool has the fastest growing economy in the entire Northern Powerhouse region. It is also the second fastest-growing economy in the whole of the UK, outside London. For this reason, it has become an attractive buy-to-let hotspot and the average yields in Liverpool for buy-to-let are about 8%.
Manchester – Similar to Liverpool, Manchester is a prime location for buy-to-let investments and the high yields combined with low entry prices in comparison to London attracts many overseas investors from areas such as China and Singapore. Yields in Manchester can range from 7.9-8.2%.
Leeds – Known as the financial and cultural heart of West Yorkshire Urban Area, Leeds is central to the North of England as a thriving contemporary city. Leeds is a buy-to-let hotspot because it attracts tourists, investors and young professionals alike. The average yields for a Leeds buy-to-let investment are 8%.
Emerging locations for student property
Sheffield – In recent years, Sheffield has become an attractive place to live, work and study. This popularity has resulted in a higher demand for housing, especially purpose-built student accommodation to house the growing number of students attending Sheffield’s universities. The average yields in Sheffield are around 8%.
Huddersfield – The small market town of Huddersfield isn’t a well-known area for UK property investment, but it is definitely growing in popularity. With transport links to Manchester and Liverpool, a wealth of manufacturing plants, and a number of higher education institutions accompanied by a drastic undersupply of student accommodation, Huddersfield is a PBSA hotspot with average yields of 8.3%.
Preston – Preston was named a top 3 property hotspot by Estate Agent Today in 2017, and it is one of three cities in the Northern Powerhouse to have a fast-predicted growth. Home to a few universities and colleges, it is a sure student accommodation investment property hotspot.
At Sterling Woodrow, we pride ourselves on helping new property investors get a solid start in the market and are happy to speak to you about your long-term goals and ambitions in property investment.
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