Rising values and rents spell good news for regional property investors
Two reports published in the last week have highlighted how strong the UK’s regional property investment market is. First up was Rightmove’s Rental Trends Tracker, which published its Q3 2018 update. Rightmove reported a sharp increase in rents, of 0.8% – the largest jump at this time of year for three years. The company also flagged up an 8.7% decline in the number of rental properties available.
Next up was Hometrack’s monthly UK Cities House Price Index. The September 2018 figures showed an average increase of 3.2% in urban house prices, but much higher rises in some of the UK’s most popular regional cities. Of the 20 largest cities, Liverpool led the growth, with a 6.9% year on year increase in prices, followed by Birmingham, at 6.5%. Manchester came fourth, at 6.2%.
“Fewer available homes to rent has led to rising rents and faster lets, both of which are good news for property investors. Add in price growth that is in some cases more than double the UK average and it’s clear why the UK’s regional cities are performing so strongly in terms of attracting property investors.”
Comparing the cities’ performance with that of London only serves to strengthen the case for regional property investment. Property prices fell by 0.4% in London in the year to September 2018, according to Hometrack, while Rightmove reports a 0.4% decrease in rents in the capital between Q2 2018 and Q3.
In pure price terms, the regions are also extremely attractive compared to London. Birmingham is a prime example. Apartments at the stunning Westminster Works development are available from £168,000. The elegant homes come complete with an impressive rooftop terrace, concierge service and secure parking, all in a top location in the sought-after Digbeth area. Investors looking to spend a comparable amount in London would be hard-pushed to find anything other than shared ownership homes or properties for the over 60s available, based on a search of Rightmove’s listings.
“Hong Kong buyers’ interest in Birmingham started building around two years ago… Previously, it was pretty much just London, which has become much more expensive over the years… They just want to own a property and rental income, so they will consider Birmingham because the price bracket is affordable. In Birmingham, it costs HK$2 million (US$250,000) to HK$3 million an apartment, whereas in Hong Kong it costs HK$10 million to HK$13 million, and in London it is HK$7 million to HK$10 million.”
Gavin She, Hong Kong Director, Savills
The same is true of Liverpool and Manchester, where apartments in luxury developments such as The Tannery and Ancoats Gardens are available from £85,000 and £229,714 respectively. These regional success stories are pulling investors’ interest away from London, at the same time as the capital’s falling rents and lack of potential for capital growth are pushing them away.
“Based on the current market fundamentals, it looks like London could be in for something of a rough ride in terms of attracting property investors over the coming months. Regional cities just have so much more to offer – they are stealing the show and look set to continue to do so for quite some time.”