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Fastest Growing City Centre Populations

Fastest growing city centre populations

The Northern Powerhouse cities like Manchester, Liverpool & Birmingham are among the most desirable areas of the country to live. These cities have managed to attract young professionals through a growing number of high-paying jobs within the city centre. For instance, Manchester had an 84% increase in city centre jobs between 1998 and 2015, while Bristol and Leeds enjoyed increases of 42% and 34% respectively.

The growth of a city is a key factor in choosing the right property to invest in because as population grows, infrastructure improves, and the desirability of an area increases. These cities are already defined by their urban cafes, bars, restaurants and gyms that the young professionals are drawn to.

The Northern Powerhouse and key regional cities are worth considering for your next property investment.

ERE are property experts and you can speak to us about our current buy-to-let opportunities in these cities.

ukcity

Five things to help direct your property investment strategy in 2018

Investor appetite for buy-to-let property didn’t diminish after Brexit and the latest UK House Price Index report from The Office for National Statistics stated that average house prices in the UK increased by 4.5% in the year to October 2017. So what should property investors in the UK and abroad be thinking about in 2018?

Location: The North West will remain a strong spot for investors

Manchester was one of the buy-to-let hotspots of 2017 and the rapid growth in jobs and population saw investors and developers clamouring for real estate in the city. Liverpool sits slightly behind Manchester in terms of popularity but the huge student population and £5 billion redevelopment of the city’s waterfront means the city is almost keeping up with its neighbour.

However, Manchester and to a lesser extent Liverpool, have become less affordable for some investors who are starting to turn their attention to Yorkshire, Nottingham and the smaller growing outside of London.

London loses its appeal in 2018

After a long period of rising house prices across London and chronic undersupply, investors have been priced out of the market and renters are struggling to pay for less space. In London, tenants are paying £100 per sq. m. compared to around 15 sq. m. for the same price in Bradford.

The Royal Institution of Chartered Surveyors (RICS) have suggested that house prices in London and the south-east will fall in 2018 and the UK is set to outperform London in house price growth over next five years says JLL UK Residential.

Smaller regional areas get greater attention

Some of the UK’s smaller cities and towns may be less well-known to international investors but if they exhibit the classic market drivers of: an increasing population; expanding and growing job market; and new large-scale infrastructure projects, investors should be considering these places as viable options for buy-to-let investment.

With lower entry price points than cities like Manchester which are growing fiercely, combined with the promise of catch-up growth because of government programmes like the Northern Powerhouse and the Midlands Engine, these lesser known cities are good investment options in 2018.

Interest rates will stay low

The Guardian reported that another 0.25% hike is expected in the first half of the year, taking the Bank of England base rate to 0.75%, although that is likely to be the only increase in the year.

For those with a mortgage, that will add £22 to the typical £175,000 tracker mortgage, but with more than half of all borrowers on fixed rates, it will probably go unnoticed by most homeowners and will only marginally affect portfolio property investors.

Housebuilding to increase

The need for new homes has been recognised and has moved up the government’s agenda over the last year with the publication of the government’s housing white paper. Back in November, the UK Prime Minster Theresa May promised to take “personal charge” of solving the housing crisis.

As a result, new home building in the UK has picked up with 217,000 homes coming on to the market in 2016-17, up 20% on the year before. But that only brings the total back to levels seen before the financial crash, and a long way short of the 300,000 target set by the government. The supply side of the housing equation will be less pressing than in previous years.

Comparing the Northern Powerhouse heavyweights

The key to Northern Powerhouse success is ensuring the sometimes neglected city regions are able to realise their economic potential. The task isn’t a small one and the Northern Powerhouse government minister is committed to balancing the UK’s economic output. Some positive outcomes of this focused strategy are emerging, as the Northern Powerhouse regions have seen inward investment increase even faster than the UK average. According to EY’s latest UK Attractiveness Survey, the north-west region attracted 90 foreign direct investment (FDI) projects in 2016 – 60 per cent of which were first time investments in the region.

Centre for Cities has compiled data on 63 of the UK’s cities to understand and improve economic performance. So how do the cities of Leeds, Liverpool and Manchester compare when it comes to house prices, employment, GVA and graduate retention, all key factors for buy-to-let investors.

In the report, mean house prices in Manchester are £175,419, whilst in Liverpool they are lower at £131,046. In Leeds the mean house price is the highest at £186,206, although when you take population growth and demand for property into account, it is evident that Manchester is a good choice for investors as the population size in 2015, placed Manchester 3rd out of 63 cities in the UK.

The Centre for Cities research also took into account graduate retention rate, or graduate gain. Graduate retention gives an indication of a city’s ability to retain newly qualified graduates based on job prospects, wages and quality of life. Leeds graduate gain is the 3rd highest of all UK cities, whilst 50% of students who left Liverpool for university subsequently came back to work after graduation.

Please note:

* The cities are ranked in order out of 62 or 63, dependent on the criteria, with places closer to 1 at the top of the list.

* “The Centre for Cities uses data for Primary Urban Areas (PUA) in its analysis. This is a measure of the “built-up” area of a city, rather than individual local authority districts. PUAs are used in our analysis because they provide a consistent measure to compare concentrations of economic activity across the UK. This makes PUAs distinct from city region or combined authority geographies.”

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