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Our 2017 property predictions have pointed to a strengthening in rental demand, due to the widening gap between the rise in wages and house price growth, and a shortage of housing.
Yet, even with a strengthening rental sector, it is clear certain cities outperform others when it comes to buy-to-let. Whether it be because of a high demand for rental properties in the area, or cheap housing compared to rental yields that can be achieved, here is our list of nine places to consider for property investment in 2017.
We mentioned Liverpool in our previously post, the best places to invest in property in the UK. Liverpool is consistently a favourite city amongst investors and from a closer look at its credentials, it is not hard to see why. L1 is experiencing phenomenal growth yet house prices in the area remain low and the average home hovers at a modest £120,000. Liverpool is set to be a key player in the government’s “Northern Powerhouse” initiative and the transport network in and around the city is due to undergo major improvements. Additionally, the Northern Powerhouse scheme aims to stimulate new business development in the north, attracting professionals to the area who will require accommodation.
Salford has been part of one of the first and largest urban regeneration schemes ever undertaken in the UK. Most recently, the development of MediaCityUK and then the subsequent arrival of ITV and the BBC, who recognised the benefit of cheaper studio space (almost 50% cheaper than in London). With its booming media sector, Manchester is now the biggest tech and creative centre outside of London, luring young professionals from the capital to the more affordable northern city. Over 60,000 people now work in the digital and creative industries in Manchester and with MediaCityUK set to double in size over the next decade, by 2034 this number is expected to increase by 27%. With the sudden influx of young professionals, buy to let in Manchester is proving to be an attractive prospect.
The East Midlands has been long overlooked as an area for property investment but with the construction of HS2 this is soon about to change. Derby is home to one of the largest cluster of rail companies in the world, and the city and surrounding area will benefit greatly from the building of HS2 in terms of the rail contracts and system deals it will accumulate. A benefit of Derby being better connected is that property prices will increase. By 2019 property prices in Derby are expected to increase by 23.3% according to BNP Paribas Real Estate – a faster rate than in London!
With more and more London professionals being priced out of the capital, towns and cities in the commuter belt are becoming increasingly desirable. Not only is Basingstoke attractive to city professionals being just 45 minutes from London, it also has its own booming employment sector. Basingstoke has attracted internationally recognised brands such as Sony, AXA Wealth and Barclays, and boasts the UK’s number one digital economy outside of London.
Basingstoke is also viewed as a more affordable alternative to Reading. More banks and pharmaceutical companies are setting up secondary offices in Reading due to its proximity to London and the arrival of Crossrail in 2019, and this has a spin off benefit for the Basingstoke housing market as more Reading workers search the wider area for more affordable housing and rental accommodation.
Rics have predicted that the rise in property prices in East Anglia will outstrip any other area in the UK. Predictions by Savills further back this up, as they forecast the East of England will experience a 19% increase in property prices, the most out of anywhere in the UK, including London and the South East.
House prices in Britain’s new towns, such as Peterborough have been outstripping the national average. Positioned as a viable alternative for tech workers priced out of Cambridge, London is easily accessible in under an hour and there are good transport links to Cambridgeshire’s county town. Between 1986 and 2016 property prices in the city have risen 477%.
Peterborough also has a higher percentage of young people aged 29 or under residing in the city (41%) compared to the national average of 38%. This demographic is particularly likely to rent, due to the flexibility it affords them. The abundance of young professionals seeking accommodation in the city makes the rental market in Peterborough particularly attractive to buy to let investors.
If you wish to acquire property as a long-term investment, Wood Green in London is a good choice. Wood Green and the “Haringey Ladder” are hotspots on the Crossrail 2 map and the target of many regeneration plans.
Despite being well connected, property prices in Wood Green are decidedly lower than surrounding areas in the borough of Haringey, including nearby Muswell Hill, Crouch End, and Hornsey. Residents priced out of more gentrified locations are finding Wood Green an increasingly attractive option, especially because of plans to regenerate the area. Just recently, Haringey council have announced £3.5 billion worth of plans to revitalise the town centre, including the comprehensive redevelopment of 25 sites, bring more restaurants and cafes to the area and create 4,000 new jobs.
The increasing demand for property in Wood Green has been reflected in the average house price, which has now increased by 26% from 2014 to £460,033. We can only predict that the prices will go up as the regeneration progresses.
Hornchurch is another one of the London locations that will be served by Crossrail. Hornchurch is a suburban commuter town with easy access to the City of London that has attracted families from Essex and individuals East End looking for a quieter life.
Although transport links are good in the area already, the arrival of Crossrail will allow commuters to access central London more quickly and easily.
Hornchurch was also rated within the top ten most in demand tube stops for new home buyers, so the potential of the area is not going unrecognised.
Ilford is already served by the Overground into Liverpool Street, but with the construction of Crossrail, journey times will be slashed and commuters will be able to travel to the West End with ease. For example, commuters will be able to reach Bond Street in 24 minutes, down from 33 minutes the journey currently takes.
Property prices in Ilford remain modest, but the presence of Crossrail and the promise of an easier commute will mean that it becomes an increasingly desirable area to live. Trendy cafes and eateries are already springing up in Ilford, which is surely a sign of things to come. Further indicators that the area is “on the up” include a 28% house price increase between 2014 and 2016 to an overall average of £381,925 (as per Rightmove).
Leeds boasts a modest average property price of £188,070. Additionally, the LS6 postcode in Leeds already gives investors the best rental yields of 10.79%, based on an average house price in the area of £116,115 and average rent of £1,044 (according to research carried out by TotallyMoney.com). Yet with the construction of HS2 the city will be better connected, which will have a positive effect on property prices.
HS2 isn’t the only exciting thing coming to Leeds. Last year Leeds city council revealed ambitious plans to double the size of the city centre in a scheme dubbed the South Bank project. Along with this, 180 hectares of land that lies to the south of the River Aire will be regenerated that will create over 35,000 new jobs and 4,000 new homes. The creation of new jobs will really add to the booming economy Leeds already enjoys and further cement its reputation as the UK’s fastest growing city.
Regeneration always attracts newcomers, who will in turn require housing. Now is a perfect time for investors to consider Leeds, whilst houses are still modestly priced.
In conclusion, our buy to let strategy would be that if you are looking to achieve good capital appreciation, consider areas with improving transport links and areas of regeneration, or undervalued spots in Greater London that are set to be served by Crossrail.
Potential investors can always seek advice from a property investment company such as One Touch Property, who will happily share their expertise and ensure that you make the correct investment decision that will meet your financial requirements and goals.
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