When it comes to property investment in the UK, London has traditionally been the prime target, especially with overseas buyers. However, the North of England is emerging as a highly attractive alternative. Here’s why savvy investors should consider looking beyond the capital for their next property venture.
Affordability and Value for Money
The most compelling reason to invest in the North is the significant difference in property prices, which not only lowers the entry barrier for investors, but allows for the acquisition of multiple properties, diversifying and strengthening an investment portfolio. With house prices in London averaging over £520,000 this is more than 85% above the national average of £285,000.
| City | Average house price |
| UK Average | £285,000 |
| London | £528,000 |
| Birmingham | £225,000 |
| Leeds | £232,000 |
| Liverpool | £173,000 |
| Manchester | £235,000 |
| Newcastle | £193,000 |
| Sheffield | £217,000 |
Data from the Office of National Statistics, correct as of June 2024
Higher Rental Yields
Investors seeking strong returns should pay attention to rental yields, and here, the North outshines London with average yields in the North being between 5-8% compared to London’s 2-4%. This can be attributed to lower property prices along with high rental demand, ensuring a steady and lucrative income stream.
| City | Long-term let Yield (6 months +) | Short-term let Yield (holiday lets) |
| UK Average | 5.60% | 5.50% |
| London | 4.95% | 5% |
| Birmingham | 6.10% | 9% |
| Leeds | 6.67% | 9% |
| Liverpool | 7.44% | 11.80% |
| Manchester | 6.53% | 11% |
| Newcastle | 7.45% | 10% |
| Sheffield | 6.38% | 9.2% |
Figures from Zoopla and Airbtics
Economic Growth and Regeneration
The Northern Powerhouse initiative is driving significant economic growth and regeneration across the North, with government investment in infrastructure enhancing connectivity and attracting businesses which creates thriving local economies. This economic dynamism is translating into rising property values and increasing demand for rental properties.
In Leeds, a total investment of over £1.4billion is being invested in the Leeds South Bank Regeneration project, aiming to create some 8,000 new homes, 35,000 new jobs and attract major businesses and skilled professionals to the area.
In Liverpool, £5billion is being invested in the Liverpool Waterfront regeneration project, making this the UK’s most ambitious regeneration project in recent history, and aims to create a new mixed-use city district with 2million square meters of residential, business and leisure space. The project will be home to 5 new neighbourhoods and aims to introduce up to 15,000 new jobs and will transform the previously derelict docklands into sustainable green space, lowering Liverpool City Councils carbon emissions by up to 80%.
In Manchester, £1.5billion is being invested into the Manchester Spinningfields project for the initial 20 building development with the aim to transform the former industrial area into a new business hub, housing tenants such as Regus, Barclays, HSBC, Grant Thornton and Royal Bank of Scotland among others. So far, the development has helped to create over 10,000 new jobs, with the majority being filled by skilled professionals working in the financial sector and has helped Spinningfields contribute over £1billion to Manchester’s economy over the last decade. This has created a ripple effect across the city and has helped generate the funding required to build the Media City development which has attracted large businesses such as ITV and BBC to the area.
In Birmingham, an estimated £1.9billion will be invested into the Smithfield regeneration project which will transform 17 hectares creating some 82,000 square meters of office space, 44,000 square meters of retail space and 3,000 new residential properties with the potential of up to 8,000 new jobs throughout the development phase and in operation.
Strong Rental Demand
The multiple regeneration projects across the north are expanding job markets which in turn are drawing young professionals to the northern cities. Investors can capitalise on this demand, ensuring high occupancy rates and stable rental income.
Cities like Manchester, Leeds, and Liverpool are developing strong business sectors, particularly in tech, media, finance, and digital industries. The presence of large companies and startups attracts professionals looking for rental housing.
While London will always have a high demand for rental properties due to its global city status, northern cities are quickly catching up. This in part is due to large companies such as BBC, ITV, Channel 4, Talk Talk, Marks and Spencer’s, Addidas, Amazon, BT, Centrica, Verisure, Kellogg’s, Nissan and many others opening offices or relocating their headquarters entirely to northern cities.
Lifestyle and Quality of Life
Many northern cities offer a high quality of life at a fraction of the cost of London. With vibrant cultural scenes, excellent dining, and green spaces, these cities are becoming increasingly attractive to professionals and families alike. The more relaxed pace of life, coupled with lower living costs, makes the North an appealing place to live, further driving property demand.
According to Professor of Economics, Geraint Johnes, while salaries may be lower in the North when compared to the capital, overall those in the North are better off, when taking into account lower house prices and rents, lower living costs, as well as shorter commutes and more free time, with research showing £1 in London is the equivalent to £1.17 in the North.
Future Growth Potential
Investing in the North now positions investors to benefit from future growth. As more people and businesses relocate from London to northern cities, property values are expected to rise. The ongoing regeneration projects and infrastructural improvements will continue to enhance the attractiveness of the North, making it a long-term investment hotspot.
The North is currently home to around 1.1million businesses, with more than 7.7million jobs with a population growth of 6.7%. The North’s economy is around £343 billion and if were a country on its own, it would be the 27th largest economy in the world.
| City | Average price 2019 | Percentage growth | Current average | Predicted average 2029 | Predicted Growth |
| UK Average | £251,000 | 13.5% | £285,000 | £340,000-360,000 | 19.3% – 26.3% |
| London | 484,000 | 9.1% | £528,000 | £600,000- 650,000 | 13.6% – 23.1% |
| Birmingham | £231,000 | -2.6% | £225,000 | £320,000 – £340,000 | 42.2% – 51.1% |
| Leeds | £189,000 | 22.8% | £232,000 | £280,000- £300,000 | 20.7% – 29.3% |
| Liverpool | £133,000 | 30.1% | £173,000 | £210,000- £230,000 | 21.4% – 32.9% |
| Manchester | £176,000 | 33.5% | £235,000 | £260,000- £280,000 | 10.6% – 19.1% |
| Newcastle | £156,000 | 23.7% | £193,000 | £220,000- £240,000 | 14% – 24.4% |
| Sheffield | £165,000 | 31.5% | £217,000 | £260,000- £280,000 | 19.8% – 29% |
Statistics from (Plum Plot) (Capital Economics) (London Datastore) (NerdWallet: Finance smarter).
Savills predicts that prices will increase fastest in North-West England over the next five years, along with above-average growth in Yorkshire & Humberside, followed by the East and West Midlands.
Conclusion
If you are considering investing in the UK property market, speak to one of our investment consultants today on +44 (0) 113 380 8930 to strategise and explore available opportunities.
