Now is the Time to Invest in the North as Yields and Equity Continue to Grow

The annual average growth rate across the UK is falling but prices in the North are increasing.

Property investors traditionally drawn to London and the South are increasingly exploring the Northern Powerhouse and its variety of housing stock. With less expensive property and reliance on the rental sector, yields and equity continue to grow.

It appears as if the northern regions of the UK are proving a safer bet – mainly because there’s a chronic undersupply of housing and thus a heavy reliance on the rental sector. This is why now is the time to invest in the North.

Price Changes

The annual average growth rate across the UK is falling but prices in the North are increasing.

Image credit: Tim Green via Flickr

The Hometrack index report monitors house prices across 20 UK cities, as well as regional and national trends. The most recent report shows that the annual rate of price growth has slowed from 8.7% down to 5.3% (April 2016 – April 2017).

However, eleven cities are still rising at a rate faster than a year ago. This surge is led by areas north of the capital, notably Manchester at 8.4%, Birmingham at 7.7%, and Leicester at 7.7%.

Likewise, property in Edinburgh (5.8%), Leeds (4.6%) and Liverpool (4.4%) also showed positive increases from where they were 12 months ago. Because of this ongoing growth, Aspen Woolf have sourced a range of investment opportunities in these areas so our clients are assured of long-term capital appreciation.

Expensive South

The London property market has become overinflated and too expensive for many people.

Image credit: Stephen Colebourne via Flickr

One of the main reasons for this fluctuation is the poor performance of southern regions, and in particular the overinflated London market. Although property prices in the capital still saw an annual growth of 3.5%, this is considerably lower than the 13% recorded in April 2016. This is the lowest level London has been at for five years.

The Hometrack report cites affordability constraints, tax changes and weaker market sentiment for lack of movement in the southern regions. It goes on to say:

“Looking ahead we expect current trends to continue with house price growth losing momentum in cities across southern England where housing unaffordability is at a record high and has priced large numbers of households out of the market.

Weaker investor demand supports this trend, taking demand out of the market and adding to supply as investors look to rationalise and de-leverage portfolios in the wake of tax changes.”

Why invest in the North?

The steady increase in prices and demand for rental properties makes the North a great place to invest.

Image credit: John Lord via Flickr

The steady increase in house prices is just one reason to invest in the north. There’s also the robust demand for rental properties, an important contributing factor to its performance. Yields in these northern regions have thus outperformed the UK average, notably in Salford (7.08%), Manchester (5.79%) and Leeds (5.96%), in the year up to March 2017.

This is because properties are generally less expensive in these areas. Combined with large student numbers and a strong demand for rental accommodation, there are no signs of this trend slowing down in the foreseeable future.

The Hometrack report also points out that households will look to take advantage of the current low mortgage rates and improving economic outlook, although some caution should still remain due to the Election fallout and continuing Brexit negotiations.

You can find out more about the properties with assured long-term capital appreciation that Aspen Woolf has secured for investors here.
If you’d like to know more about the current and future property market, you might be interested in why there is an Optimistic Outlook for the Property Market in the Next Five Years.