The divide between the North and South is something that’s been recognised throughout history. There are distinct cultural, economic and social differences between the two regions that contribute to every element of life. For instance, down South, incomes are generally higher, unemployment is lower, and even the average life expectancy is significantly higher than for people up North. The one element that the North holds in its favour, however, is the housing market, with a number of London investors shifting their focus up North . Let’s take a look at the state of the housing market within the cities of the Northern Powerhouse compared to London, and work out which area has the best returns when it comes to property investment.
The North and South Divide
Northern Powerhouse cities such as Liverpool, Manchester, and Leeds, are quickly gaining momentum as property investment hotspots and the best places to buy to let in the UK. The North has come a long way since decades ago, back when Northern cities and towns faced great economic difficulty whilst the more affluent South thrived in comparison. The economic power of London has been noted ever since the 19th century, and by the 1980’s, this divide between the North and South had become one of the countries biggest political issues.
The housing market is one area that was affected by Thatcherism in the 1980’s. In the 1970’s, the average house price across the UK stood at around £4975, but by the 1980’s, prices rose drastically. During this era, houses reached record highs of £39,500, almost doubling by 1990 at £60,000. The number of new housing developments being built during the 1980’s was low, with more of a focus on regenerating existing buildings and converting run-down areas like Liverpool’s docks.
In the North, housing has always been significantly lower than in the South. Whilst the average property price in 1995 stood at £90,000 in London, the affluent L19 postcode of Liverpool was more than half this at just £43,000 in the same year. That’s not to say, however, that Liverpool hasn’t always had the potential for return on investment, with properties in the same area reaching highs of £278,495 by 2015.
London Property Investment
Over recent years, London has lost its appeal as a city to invest in, particularly for those seeking the best places to buy to let. With an average property price of £671,412 in 2018 which is rising each year, decreasing rental prices, and some of the lowest rental yields in the country, it’s no surprise that people are starting to look elsewhere for their ventures. Rental yields in London average at around 3.7%, which leaves hardly any potential for returns when paired with the high London prices. The more affordable boroughs of London are seeing the highest demand for property, suggesting that fewer people in the city are prepared to pay the high rental costs needed for a decent return on investment. With overall demand for London property having dropped to just 27% in 2018, prospects aren’t looking good for investors in the capital.
It isn’t all doom and gloom on London’s property front, however, with a number of the city’s neighbourhoods predicted to offer some promising future investments. Croydon, Earls Court, Canary Wharf and more areas are estimated to grow by 2020, with increased rental yields in London that mimic those of other cities in the UK. But what about those who don’t want to wait for the highest rental yields in the UK?
Investing In The Northern Powerhouse
Investment into the Northern Powerhouse has never been stronger. The key cities of the Northern Powerhouse, Manchester and Liverpool, all offer some great rental yields and potential for those keen to invest in some of the best buy to let areas. Whilst Northern cities have for a long time been deemed less favourable when compared to Southern cities like London, in actuality, Liverpool and Manchester are now some of the most dynamic and prosperous cities in the country.
Liverpool and Manchester have everything an investor or tenant needs in a city. From beautiful architecture, a rich culture, renowned universities, exciting business opportunities, and brilliant attractions and local amenities, the North has come a long way since the days of economic turmoil. The Northern Powerhouse is an initiative that’s aiming to improve the cities of the North even further by investing in transport and connectivity, skills and education, economic growth, and overall quality of life for those living and working up North.
The exciting plans in place for Northern cities like Liverpool and Manchester are part of what makes them some of the best buy to let areas in the UK, with an optimistic outlook for capital-growth. Liverpool and Manchester offer some of the highest rental yields the UK has seen as of late, with an average of 5% in Liverpool and 5.5% in Manchester. The price it costs to purchase a property up North plays a big part in this outcome, with property in Liverpool, for example, costing £130,677 on average.
Not only this, but rental prices in key Northern cities are rising, with a 2.65% growth in Liverpool and 5.76% increase in Manchester. This increase has likely been driven by the number of people moving up North from London in recent years, with Manchester having seen a total of 10,200 Londoners move there in 2017, compared to 8,870 people leaving the city to head to London. With a number of exciting business opportunities available in Manchester, a lower cost of living, and better value for money regarding rental properties, it’s not hard to see why people are being drawn to the North.
Overall, it’s clear that for investors who want to make an attractive and safe return on investment without having to wait, looking throughout the Northern Powerhouse is the best route to take. At RW Invest, we offer some of the best rental yields in the UK in some of the best places to buy to let. Get in touch with us today to chat with a knowledgable member of our team and find the perfect investment opportunity for you.