Investing in Suburbs

What Makes Suburbs a Great Investment Location?

Explore the Suburbs...

Suburbs are the perfect location for students and professionals wanting more for their money whilst benefitting from all the city centre offers. Areas with many local amenities such as sports clubs, schools, shops, and parks, often achieve higher demand for property. Whilst property prices are lower, elevated levels of rental demand lead to increased rental income for landlords. Continue reading to discover why suburban areas are among the best places for property investment – especially for those looking to climb the property ladder.

Factors to Identify When Investing In Suburbs

If you invest in an area with strong growth at the beginning of an uptick, you could benefit from long-term capital growth. The key is looking at the following factors to identify those key suburb locations before they become overly popular!

Amenities

Buyers tend to be more drawn to properties if they are located in an area with accessible, high-quality amenities. These will be situated within walking distance or a short drive. Examples of key amenities include schools, parks, shops, hospitals, and entertainment. Growth potential is led by amenity and lifestyle appeal to residents and tenants. This means that property in an area with many local amenities will benefit more from housing demand. It also creates convenience as no one wants to have to drive miles for a quick trip to the shop. A suburb with a strong community focus and lifestyle appeal will be far more desirable than a suburb surrounded by large industrial developments.

Accessibility

Having excellent accessibility in the suburbs is crucial because it makes it easier for people to travel and also benefits the area. Main road connections increase desirability as the road network facilitates easy access to other cities and towns. Buyers who do not own or drive a vehicle often rely on public transportation for commuting. Therefore, excellent public transport is attractive to such buyers.

Reliable public transport, such as local train stations and regular (and reliable) buses, will attract students and young professionals who need to travel to and from universities and places of work. These residents require quick and efficient travel to and from the cities. Hence, rental demand in such areas is often much higher than in places with poor connectivity.

Population Growth

Population growth of an area is a key factor to explore as it will give investors an insight into the town’s growth and the increasing need for accommodation. House prices will naturally increase when the population in a local area grows faster than the number of properties being built, eventually leading to capital appreciation. This is a result of a supply and demand imbalance, as the demand for housing outstrips the supply of homes available within the area.

The population largely consists of a younger demographic, who are much more likely to rent than an older population. Renting is a much more appealing option for those unable to afford rising house prices. Young professionals make up the majority of the rental market, which also links back to needing reliable public transport. Generation rent is on the rise – and this will not be slowing down anytime soon, which brings positive news for investors.

Regeneration

Property investors should focus on the regeneration schemes underway in an area, as these initiatives can significantly influence property prices in an area. Essentially this boost is driven by the enhanced desirability of the area. A plan to create new entertainment or transport connections can positively impact prices, whilst other developments could negatively affect property prices by making the location unattractive. Regeneration projects aimed at improving amenities, such as entertainment options or transportation networks, can positively influence property prices. Assessing the balance between supply and demand is crucial. An abundance of new amenities without equivalent levels of housing demand could lead to longer selling times or even stagnant prices when investors choose to sell properties.

When investing in suburbs, investors should also look at regeneration plans in nearby cities as this will also impact the suburban towns as cities grow outwards. If a project is happening in the city centre it will largely benefit the suburbs. People will likely want to move closer to the centre but may not want to or be able to afford property within the city centre, so looking at forecasted growth, makes suburbs the perfect location for first-time investors.

Market Trends

Another factor that investors need to consider is the market trends in an area. Statistics such as property prices, average income, employment rates and rental demand, will give investors an insight into what to expect from an investment. With the data, investors can gain a better understanding of whether an area is a safe place to invest and the potential for a high return on investment. It is also good for investors to research the stability of the market in the area to ensure they do not lose money on an investment. Looking at market insights will help investors know where and when to invest.

For example, for investors who want to purchase a buy-to-let property, it is best to invest when rental demand is high, to achieve higher rental yields and maximise profits. This is due to being able to charge more with the increased competition between renters.

Benefits of Investing in Suburbs

Investing in suburbs offers many benefits to investors. Here are a few to consider…

Affordability

One of the main benefits of investing in suburbs is that it is cheaper than purchasing properties in city centres on average. First-time investors can benefit from these prices as it is a great way to step onto the property ladder, with a smaller deposit and upfront payment. Investors can obtain larger apartments or houses with more space for less money than purchasing a property in the city centre for the same price. For example, a small studio in the city centre may cost you more than a larger 2-bed apartment only 15 minutes away from the city centre.

More Variety of Tenants

A more expansive pool of tenants can be targeted in the suburbs. With schools, fewer crowds, a community feel and lower crime rates, suburbs are an ideal location. Especially for families, young couples, or older individuals planning to move or buy a home for the first time. Homes in the suburbs would be more desirable for tenants as they would suit more lifestyles and tick the requirements of those looking for more outdoor space, in comparison to an apartment block in a busy city centre.

Benefit from the City

Million-pound regeneration schemes are taking place across several cities, which will boost desirability and create a demand for houses. Therefore, suburbs close to the centre will become desirable locations as they have more spacious properties and less crowded areas yet still have easy access to city centre facilities. As cities grow they have to expand leading to suburban areas eventually getting closer with time as the city begins to expand. Creating a higher chance of capital growth and increasing demand.

Growth Potential

Many factors could lead to growth in suburban areas. Suburbanisation is one of these factors. It is the migration of people from urban cities to suburban communities. These people tend to look to suburban areas for better property prices. They will also still have easy access to cities but will live in more communal and quiet areas. This will lead to the area growing and developing quickly, especially if it is near to a city centre as the town will benefit from the growth of the city. Overall, these factors will benefit the area and investors, increasing the potential for capital growth on properties.

13 Feb

Capital Gains Tax: What You Pay It On, Rates, and Allowances
Have you heard about Capital Gains Tax (CGT) but are unsure how it works or why it matters? You’re not alone. In this article, we’ll break down...
Learn more
30 Jan

Manchester’s Property Market: Explained
Manchester’s property market has quickly emerged as one of the UK’s most dynamic and fast-growing markets, offering a wealth of...
Learn more
09 Jan

Five Reasons to Invest in Sheffield
As one of Europe’s greenest cities, Sheffield offers the perfect balance between industry and nature. The city is one of the northern powerhouses...
Learn more
28 Nov

Is Now a Good Time to Invest in Property in the UK?
Property investment has long been regarded as one of the most reliable and rewarding ways to build wealth. The UK market offers exceptional...
Learn more