Why does population growth matter in property investment?

In the next 20 years, the UK’s population is expected to grow to 74 million people. It goes without saying, a growing population will inevitably lead to an increased demand for housing. One of the most important factors to consider when entering the property investment market is the population growth in that area.

How does the population affect property prices?

Houses will increase in value when the population in a local area grows faster than the rate of properties being built. As a result, prices will go up. It’s a simple question of supply and demand.

If you caught our article on the fluctuating housing demand, you will know that demand was high throughout lockdown. As restrictions were lifted, the demand began to ease. However, the supply and demand imbalance remains as the housing supply falls short. This is largely because of the increase in first-time buyers in the market who don’t have properties to sell, which contributes to the imbalance. The government made large investments in 2020 towards more affordable housing, which made it easier for first-time buyers to secure their first home. Secondly, as restrictions were lifted, buyers focus shifted towards socialising and away from home buying. That said, we saw a strong start to spring, as demand soared to the highest in a decade.

With many factors contributing to the fluctuating market, we can be sure that population growth will always ensure demand for housing. If you are looking to enter the property investment market, you should always look in locations where the population growth is forecast to increase. Usually, these are areas where regeneration is high. Companies are locating there and prices are fairly affordable.

Which cities have a growing population?

As mentioned, growing populations tend to be in cities that people want to migrate to. This is usually cities that have undergone regeneration and have become attractive places to live. These cities will be more affordable to live in, but investors will see great capital growth over time.

Manchester

Manchester’s population is booming, with statistics revealing the population in Manchester alone has grown faster than the national average. The surge in population has meant more businesses have chosen to relocate to Manchester and more jobs have been created. Manchester also has a very high retention of students with over half (51%) choosing to stay in the city after graduation. Manchester has undergone some major developments, including Piccadilly, Mayfield, Great Jackson Street and St John’s. This has had a huge positive impact on the growth of the city.

Sheffield

Sheffield poses as one of the best places for regeneration and property investment in the UK. The city has undergone major regeneration, with an impressive £1.5bn worth of regeneration to be spent across two decades to revamp the city. This makes the city a property investment hotspot. Ambitious regeneration schemes mean Sheffield is on track to achieve strong capital growth. Also, Sheffield is one of the most affordable places to buy properties in the UK, meaning you will be able to get more for your money.

Liverpool

The population of Liverpool has soared in the last decade. Especially in the city centre, where figures have doubled what they were in 2006. Students and young professionals (aged between 17-29) make up 75% of Liverpool city centre residents. This is likely due to Liverpool’s distinct sense of city life, as well as the vast regeneration plans in the pipeline. Also, Liverpool is well-known for being one of the most affordable cities in the UK. Everything in Liverpool, from housing to a pint of beer, is much less expensive than in many other cities, particularly those in the South. Liverpool’s affordability has propelled its population expansion, as more people have decided to relocate from more expensive regions such as London.