PROPERTY INVESTMENT IN NORTHERN ENGLAND

Since its beginnings in 2014, the Northern Powerhouse project has coincided with cities in the North experiencing rapid growth. This government-backed initiative has raised the profile of the region and helped improve its economic prospects significantly – and the housing market has grown at the same time.  Whilst certain pockets have spiked investor interest more than others over the past decade or so, as an area overall there still remains to be a considerable opportunity in the North of England for those wishing to purchase a buy-to-let property whether that’s in one of the more established locations of an up and coming hotspot

It is now a common sight to visit a city such as Manchester and see a skyline filled with cranes as more and more Northern property developments rise out of the ground each year. But what exactly is going on in the Northern Powerhouse that makes it such a prime investment opportunity?

The North of England is the worst kept secret in property investment, but investors might not fully understand why this region in particular is such a good place to invest in property.

Here we consider why the North of England is such a good place to invest.

Property Market Growth

The North West in particular has shone over the past decade and continues to lead the UK’s property market with prices up 15% in the year to May 2021.

From Manchester and Liverpool to Sheffield, Leeds and Newcastle, there’s opportunity to be found in every city in the North of England and indeed many of the tertiary towns are worth considering too.

In fact, in 2023 alone, the region, according to several projections we could see price rises of up to 10%.

Looking ahead to the next four years, growth is also expected to the tune of a 35% rise in property values, as the region’s historic affordability leaves its properties considerable amounts of space to continue growing.

Rental Market Growth

The UK’s strongest rental markets can be found in the North of England. As the London market continues to fade, rents are rising fast due to population growth and economic development in cities like Manchester.

Average rents outside London reached more than £1,000 for the first time in Q2 2021 according to the latest Rental Price Tracker from Rightmove. That figure represents a rise of 2.6% in three months and 6.2% over the last year – strongly impressive figures which reflect record tenant demand and unprecedented competition for the most desirable homes.

When you focus in on the North, the picture gets even more impressive. The North West in particular is an excellent example of how strong the Northern property market is. Rents in the region have risen by 6.9% and much of that growth is concentrated in city centres. The likes of Manchester and Preston are the UK’s leading property hotspots and the centre of the Northern Powerhouse’s prosperous property future.

Case Study: Manchester

The perfect example of purchase price & rental growth is Manchester, a city which has become the UK’s de facto second city thanks to its remarkable economic growth.

The city centre economy is worth more than £6bn annually and employs more than 150,000 people, this is 10% of all employment in the region. Overall growth of 4.3% a year puts Manchester far ahead of the UK average (3.6%) and gives the city a solid platform to continue attracting new businesses and young professional workers.

Manchester is already one of the tech capitals of Europe and boasts companies such as Amazon, Google, The Hut Group, the BBC and many more who have chosen to make the Northern city their home. Manchester currently offers an incredible talent pool, a thriving hub of fast growing UK tech start-ups and is a centre of academic and intellectual excellence.

Inevitably, this has a knock on effect on the housing market. More people coming to Manchester means more demand and competition for the best housing – especially in the busy city centre market. This pushes prices up and contributes to Manchester seeing annual growth of 7.4%.

This is just one example of how rapid economic growth in the Northern Powerhouse is leading to a prosperous property future in the region – and there is a lot more to come. Savills is predicting a further 28% average house price growth in the North West by 2025 due to the economic growth happening in cities like Manchester.

What’s Next?

The north offers more to investors looking for a well-rounded property investment – one that can provide good rental yields and the potential for capital growth. Despite a continuing growth in house prices, northern cities still remain largely affordable, which is the key balance in today’s property investment market. Towns such as Hull and Birkenhead are ideal for investors looking to get onto the buy to let ladder as they’re relatively low risk and offer high returns over a long period, giving them a great advantage and their first step to begin building a portfolio.

With the average property price in Manchester nearing £250,000 as at 2023, it is slowly shedding that tag of being affordable. Below we have highlighted 3 key areas that are more affordable and easier to get into with growth potential.

• Durham County– Average Rental Yield- 9%       Average Property Price- £55,000
• Burnley– Average Rental Yield- 7%       Average Property Price- £85,000
• Morecambe– Average Rental Yield- 7%      Average Property Price- £130,000

These areas above have good rental yields as well as average house prices. They also have potential to increase both rental yield and average pricing in the next few years. 

Whilst certain pockets have spiked investor interest more than others over the past decade or so, as an area overall there still remains to be a considerable opportunity in the North of England for those wishing to purchase a buy-to-let property whether that’s in one of the more established locations or an up and coming hotspot.