Top 3 UK Property Hotspots of 2018
Updated: Oct 18, 2018
One city we know is not going to make the list this year is London! However, take a look at our Top 3 UK Property Hotspots of 2018
Many still see Birmingham as the UK's second city, a title now more frequently associated with Manchester. But despite being overshadowed by the recent success of the Manchester property market, Birmingham has held strong and its property market has shown consistent capital growth.
The City of Birmingham has experienced challenging times over the last decade, it has had to compete with the Northern Powerhouse and the booming south-east, two huge economies.
But Birmingham is a heavyweight in the UK. According to a recent study by ONS, the city has an economic annual output of over £26.2 billion. It's also home to the largest number of new businesses in the UK, has over 39 million visitors each year and has seen annual property prices increase above the national average at 6.6%..
Latest data from the 2018 Deloitte Birmingham Crane Survey which looks at development activity across central Birmingham shows that in 2017 there were 24 new property schemes under construction, well above the 10 year average of 13.
The latest figures show continued development in the city's commercial and office market. Office construction was well over 1 million square feet in 2017 and this is expected to grow further this year and through to 2019.
Regeneration, a strong economy, improved transport links, job opportunities and an improving educational system are all helping to keep Birmingham performing as a top tier buy-to-let city. The demand for rental property continues to rise and like many regions across the country, the supply is not able to keep up.
Over the last 5 years there has been a huge amount of interest in the Liverpool property market and so far 2018 has been pretty much the same.
My view on the city may be slightly biased as I purchased my first buy-to-let property in Liverpool and to this day it continues to perform very well for me. I invested in a purpose built student, studio apartment and 5 years on I have never had a void period. I am out of my period of "guaranteed income" and my yield has increased by 11.5% returning me 8.7% NET.
For me the formulae in Liverpool was a very simple one. The city has three universities, one of which (The University of Liverpool) is ranked within the top 200 in the world and the other two attract a growing number of students each year.
Limited supply > growing demand > well established infrastructure = Strong demand + scope for rental and capital growth.
In addition to the obvious at the time, Liverpool also appealed to me because it is full of history, stunning architecture, character and charm and is without doubt one of the most thriving cities in the UK. Parts of the City were even granted World Heritage Site status by UNESCO back in 2004.
Liverpool has benefited heavily from the government backed Northern Powerhouse scheme and to be quite frank, it needed it. During the 90's and early 2000's the image of the city, often stamped in people's minds were the abandoned houses and the street that supposedly sold for £1. But to say that the city has seen a complete turnaround would be an understatement.
The Northern Powerhouse has played a vital role in the regeneration of a number of key northern cities including Manchester, Newcastle and Leeds. Liverpool alone has seen investment surpass the £14 billion mark which has improved transport in to and around the city, sports stadiums, improved and modernised public spaces and services and 10,000 new homes.
Average property prices in Liverpool have reached approximately £118,000 in 2018 which means there is still the opportunity to get a lot for your money, especially when compared to our capital where the average price is closer to £500,000. According to Hometrack Liverpool saw prices increase by an impressive 5.9% from June 2017 to June 2018 and this trend is expected to continue over the coming years. Why? Because of the huge amounts of both private and government backed investment in to the city plus the chronic under supply of housing, that currently exists.
I'm sure it comes as no surprise that Manchester is our top pick for the year so far. Prices have increased by over 5% compared to this time last year and rental yields have remained above 6% in many parts of the city.
Over the last 7 years the population of the city has seen a swift increase in the average household income and this has created a demand for high quality residences, which in turn has created opportunity for private developers and property investors.
The cost of living and operating in the south has become ridiculously high, the average property in London is now priced at £489,000 and businesses are feeling the sting from the cost of renting offices.
The recent move of the BBC offices from London to Media City in Salford Quays is a clear reflection that both individuals and businesses alike are being forced to look further to seek a better balance between opportunity, cost and standing of living.
After recently spending time in Manchester, you can feel it in the air, the buzz around the city is infectious.
For the second year running The Economist’s ‘Global Livability Index’ for 2018 voted Manchester as the best city in the UK to live in.
Mike Blackburn, chair of the Greater Manchester Local Enterprise Partnership, said:
“This ranking not only reflects Manchester’s resilience in the face of adversity but also marks a welcome return to the city’s consistent, year-on-year improvements in the world rankings, highlighting the progress being made in achieving our ambition to be a top 20 global city by 2035.
The city is enjoying increased economic prosperity which is attracting professional talent from across the globe but also retaining home grown talent from the cities three main world-class universities. A huge 50% of the cities graduating students choose to stay in the city and 1 in 6 Manchester-born students studying elsewhere, now choose to return after graduating.
The growing number of young professionals in Manchester is driving the demand for high quality, city-centre apartments, close to local amenities, transport links, bars, shops and restaurants.
Mike Blackburn went on to say:
“Manchester has a strong employment offering across its growing sectors, with excellent transport connectivity and work-life balance combining to make this a great city in which to live. "
"Improvements in healthcare and education, alongside attractive qualities such as our thriving night-time economy and sports offering, continue to attract people from around the world to live, work and study in Manchester."
No other city has benefited more from the Northern Powerhouse scheme than Manchester so it's worth taking a look at this a bit further:
With the governments plan to shift trade to the north away from London and diversify our country, Manchester is now the UK's second largest city. Greater Manchester generates over £58 billion GVA each year compared to the £27 billion produced by Merseyside.
The key contributing industries fuelling the growth include Financial & Professional Services, Health & Social Care, Advanced Manufacturing, Educational and Creative & Digital.
The skyline of Manchester is filled with cranes and large residential and commercial developments being constructed. According to recent government reports, 55,000 new properties are going to be needed over the next 10 years to provide homes for the increasing number of people choosing to call Manchester their home. Although it might seem like there are new residential developments being erected every other day, the reality is, far more is needed in order to meet the demand. It's expected that there will be a 30% shortfall in supply due to the unprecedented growth.
In addition to the city-centre, surrounding areas such as Salford Quays are also becoming prominent on the radar of the regions young professionals. Media City is home to over 80 media organisations making it the UK's second largest media hub and a key location for buy-to-let investors. Our Wavelength development will be perfectly suited to the professionals working just 5 minutes away.
In summary, my three recommendations all offer fantastic opportunity for solid capital growth and a consistently high rental yields. Manchester takes the deserving top spot for me because despite the success the city has enjoyed over recent years, it still has so much potential to further expand, develop and become one of the best places to buy investment property in the UK and possibly Europe in 2018 through to 2019.