Why are Investors Looking North?

The capital of England, London, is known for having incredibly high property prices, and rental prices. However, the UK housing market is growing at a rate that London can not compete with. There are several reasons this is the case, with the cost of living increasing, flexible working and better transport links all allowing tenants more options of areas to live.

Now investors are starting to look North for lower property prices and higher rental yields. Many northern cities are currently undergoing regeneration projects, which aim to increase retention, the quality of life and strengthen the local economy of northern cities. The UK government is also focused on levelling up in the north, causing a property price boom outside of London.

Below is the property price growth in different areas, according to the latest market report by Zoopla.

Low Property Prices

Investors are aware that property prices in London are exponentially high when compared to the rest of the UK. When buying property in London, the square footage of an average property is small. So, with rental prices being high investors would expect high yields, but this is not the case.

The average property in London costs £526,000, over twice the cost of almost any other area in the UK. An example of this is Manchester where property prices are currently £219,700, according to the latest report from Zoopla. Therefore, investors should look to secure more properties in other locations, to secure a diverse portfolio. Owning property in multiple locations allows investors to take advantage of several high-yielding properties nationwide and will provide multiple streams of passive income.

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Capital Gain

Investors looking to achieve capital gain from their property portfolio will want to monitor the growth of their areas of choice. In London, property prices dropped in the past 5 years and have since only recently started a steady incline of 4.4% year on year. However, north of London, cities including Liverpool, Manchester, and Leeds are seeing a climb of between 8.5% and 9.3% year on year.

These increases can assure strong capital growth, with many of these cities closing the property price gap with London. Also, many cities are continuing to develop and regenerate, which is improving local economies and in turn, growing property prices.