The UK property market has become increasingly volatile in the post-Brexit era, and stark regional differences have made picking the right investment even harder.
Investing in London and the South-East has historically generated higher overall returns, but prices have stagnated recently with buyers being priced out and investors unable to justify shrinking yields. Many investors are now looking to the North where yields are the highest in the UK and house prices are predicted to grow. But where in the North is the best place to invest in 2019?
As the unofficial capital of the North, Manchester is the fastest growing city in the U.K. outside of London. Manchester currently offers the highest rental yields, averaging twice those on offer in London. The average house price in Manchester is £152,000, which is extremely affordable in comparison to London’s average house price of £500,000, and the city has a sizeable rental sector.
The recent regeneration projects in Manchester have pushed property demand in the city up significantly, including the Salford Quays complex and the digital Northern Quarter. Outside of the city, neighbouring areas such as Salford have seen a growth in interest, following an influx of new businesses. Salford’s Media City UK became the headquarters of BBC Sport and CBBC in 2011 pushing up property prices in the area, which are now growing by 8.8% annually.
Around 30% of Manchester’s housing stock is in the private rented sector, the city has a six-figure student population, underpinning demand for HMOs and flats. But the opportunity may not last, as the city is becoming popular amongst investors not only in the UK but internationally. And local councils have started to limit the issue of HMO licenses and in some cases even revoke them.
Like Manchester, Liverpool is home to one of the largest student populations in the U.K., meaning there is high demand for cheap accommodation. One way to create a great investment here is to rent low-priced houses to students, which commonly earn yields of 8%.
Liverpool has recently benefitted from large-scale job creation and public investment, making it the UK’s fastest-growing economy. Regeneration projects include the £5 billion Liverpool Waters scheme, a 60-hectare brownfield site which will be transformed into five new neighbourhoods.
The suburbs of Liverpool are another place investors should look. With rail links expanding and prices still very low, properties here are currently generating yields of around 6%. The recent increase in demand has certainly pushed up property prices, as Liverpool experienced a 7.5% growth in the last year alone with no signs of the trend slowing.
Sheffield is one of the greenest cities in the U.K., with over 80 parks and more than 2 million trees, and may be a great place to invest. The city is home to two of the UK’s largest universities, yet seven out of ten students in the city have admitted that they do not have access to university-provided accommodation. This number is set to increase further with the international student population predicted to grow by 15 -20% over the next five years.
With a 4.5 million metropolitan population and a £90 billion regional economy, Birmingham has benefited significantly from recent investments in infrastructure. The new development of HS2 is going to slash journey times from London to just 50 minutes, which will mean property in Birmingham will be in even greater demand. A chronic shortage of rental accommodation is already driving up property prices, especially those along the A456 corridor including suburbs like Halesowen and Edgbaston.
Top Tip for Investors
As an investor, it’s important to understand that sourcing and buying are just the first steps in making a good property investment. Depending on your strategy, managing a portfolio efficiently is arguably the most important and time-consuming part of being a property investor. Luckily there are a range of cloud-based property management platforms that can save you time and money.
With new cloud-based technology, you can manage your investments from anywhere in the world, broadening the areas you may consider for investment, and opening the best opportunities from around the world.
Systems such as Arthur Online are entirely customisable. You can use them to remain in a central managerial position while not actually being on the ground, as things like tenant check-in/out can be handled by local agents. You can arrange viewings, sign documents and assign workorders to contractors all through dedicated apps.
This new generation of proptech is making the property sector more connected, ultimately helping investors manage and grow their portfolios efficiently and hassle free, and giving them access to the most profitable opportunities.