Whilst London has always held its own for property investment thanks to high rental yields and strong capital gains, the continuous rising property prices, coupled with this new 3 per cent increase, is pricing some landlords out of the market in the capital.
This change is a chance for investors to reassess where they are looking for properties, with the north of England looking like a great place to start.
Manchester has seen a 118 per cent increase in the number of foreign direct investment projects when compared to 2014, highlighting that internationally, savvy investors have already made their move on the region. UK investors in London, however, are still not taking full advantage of the opportunities on offer.
Why should the north be looking attractive to property developers? Firstly, the Government is fully committed to the idea of the Northern Powerhouse.
Although some critics have argued that the concept is little more than rhetoric, with many suggesting that Manchester will benefit disproportionately, there’s strong indications to suggest that the long-term opportunities that the Northern Powerhouse will bring for property investors are too great to miss.
Earlier this month in fact, George Osbourne praised the Northern Powerhouse project, stating that annual foreign investment in the region had increased 127 per cent in the two years since the idea was introduced.
Similarly, transport links and hubs in the region have massively improved in recent years. Phase one of the HS2 is planned to start next year, which will provide essential transportation links between major UK cities and transform these regions in the process - so now is the time to snap up properties in these areas.
In addition to this, there are new international airlines serving Manchester Airport, including the first direct flight from Manchester to China taking off from the airport earlier this month, and a £4billion investment in Birmingham’s public transport system.
Expanding on the subject of rental yields, average rents in the capital fell 0.7 per cent between April and May. Manchester and Liverpool, however, show the two highest average annual rental yields in the North West at 6.02 per cent and 5.15 per cent over five years.
When looking at the potential total return on investment, the huge growth in property prices in London is restricted to the capital, so investors need to look more at the affordability of property in the north. Strong capital growth is still very much available so don’t use this as a reason not to explore properties outside of London.
