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25
Apr
2023
London vs North: Where to Invest 2023
Category: Property Investment
Should You Invest in London?
With average house prices in London costing over twice as much of anywhere else in the UK, those investing in London property would expect higher returns. But this is in fact the opposite.
Since entering a post-pandemic world, businesses have become more flexible with hybrid or even remote working, allowing employers to willingly cast a wider net to source skilled professionals. With the rising cost of living and hybrid working, London residents and workers are migrating to the outskirts or even further afield. This, along with funding into faster rail links, can explain the increased rental demand outside and north of London.
However, due to this, the North-South divide has closed ever so slightly, concerning UK house prices. This will only continue as regeneration projects, growing population, and job opportunities increase northern cities’ costs.
The Cost of Living
It is no surprise that England’s capital city is the most expensive region in the UK. London house prices reach around £511,293 against the standard £258,115.
Even as the desire for living outside of London rises, England’s capital city remains to be the most expensive option for both investors and tenants.
As the cost of living only continues to rise, is it any wonder that people look to Birmingham or Manchester over London for more affordable city living?
For people in the property market, whether new or experienced, commuter and northern cities are seen to be the best places to invest thanks to a better return on investments. The cost of living is lower in the North than the South, making rent and house prices more affordable. As more and more people migrate to these areas, the rental demand and prices will only increase. The enhanced desirability will result in much higher rental yields above the UK’s 3.74% average.
Looking North
The North of England is home to lower living costs and some of the best rental yields in the UK.
A few of the top-yielding cities in the UK are Manchester (6% yields), Leeds (6.5% yields), and Birmingham (5.5% yields). Primarily, these are cities young professionals are drawn to due to growing job markets.
So, naturally, investors are following suit and are looking north, targeting areas with a strong capital growth and high rental yields to grow their property portfolio.
Northern England holds some of the most exciting buy-to-let areas for 2023. The North-West is named as one of the most promising regions for the UK property market, scoring particularly high for regeneration projects. Regeneration is great news for investors, as rental demand increases along with new-build opportunities close to these areas.
Investing in Liverpool
Recently named as the best place to live and work in the UK, is it any wonder that Liverpool is one of the best places to invest, too? Experiencing a growth in property price, investors can expect yields of 5.4% in Liverpool. This will surely grow as the city’s population, tourism, and attraction do.
Liverpool is continuously evolving, with regeneration projects worth £7 billion either already done, underway, or in the pipeline. Most of this funding is to fully revamp the city’s waterfront. This is one of the UK’s most ambitious regeneration projects in recent history – to create a 2 million square-metre residential, business, and leisure space. This transformation is aimed to introduce up to 15,000 new jobs alongside a boom in tourism.
Investing in Sheffield
Sheffield is one of Europe’s greenest cities, meeting a sustainable tier 2 city in the UK. It is improving this by the ongoing restoration projects, like Heart of the City 2. Thanks to £470 million worth of planned developments, this project is to create up to 7,000 new jobs and strengthen the local economy.
The city is constantly on the rise, but its property prices sit at an agreeable average of £171,600. This is far lower than some properties found in the UK’s largest cities, with Leeds and Manchester offering £208,000 or £219,000 for the average property. Lower property prices are always a good sign in representing lower-risk investments. If property prices were to make a dip, the invested capital is far more secure.
Investing in Manchester
Manchester is one of the best places to invest in property in the UK, home to one of the strongest new-build markets in the country. These properties are often off-plan but bought at a lower price while yielding higher returns. Manchester alone accounted for 5.5% of all new properties sold in England during 2022, making it quite the investment hotspot.
With increasing property prices and companies like Kellogg’s, Adidas, HSBC, and MediaCityUK calling the city home, Manchester is proving to be quite a contender for London. So much so that the next three years could see a further 20,000 people relocating to this Economic Powerhouse.
Investing in Birmingham
The UK’s first Compassionate City and the ‘next Silicon Valley’ are just a few names Birmingham has earned over the years. This is all down to the hopeful future it has ahead, from its capital growth and many regeneration projects either currently underway or in the pipeline.
A record-breaking 2,398 new homes were delivered in Birmingham last year. This is alongside the start of 43 new schemes that equate to 6,487 new residential units now in process.
That isn’t Birmingham’s only project. The Grand Central Birmingham transformation is repurposing the vacant four-storey retail unit into a progressive ‘wellbeing-designed’ office space. This project is predicted to create 2,000 jobs, with many people choosing to either relocate for work or make use of the direct routes to one of the Midlands’ largest train stations. Inspired by the concept of a 15-minute city, the project is set to improve the local infrastructure of Birmingham.
With all these plans for Birmingham, it is forecast to become one of the highest-yielding places available in the UK. It is already the best major city for return on investment, with it taking an average of 15.6 months to make deposits back on apartments.
CityRise Verdict
Investors should look to secure properties in many locations north of London for numerous high-yielding opportunities. The North is the best place to invest, ideal for building a portfolio and creating multiple streams of passive income.
Northern property and rent prices continue to increase and potentially compete with the city of London. As the North-South divide grows ever closer, there is no better time to invest in the North.
Even if based further afield from the investment, CityRise can handle the tenancy of your buy-to-let if you desire a hands-off approach. Reach out to our Investment Consultants and schedule your free consultation to discuss opportunities today.
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