At the height of the property market’s pre-recession pomp, there was nowhere in the world that was quite like London for investors. With house prices high and rental demand pushing the cost for private tenants in a similar direction, London was the place to buy for short-term growth, long-term stability and overall fantastic returns.
However, a lot has changed in the UK since that time. Improved business conditions away from London have meant a migration of companies away from the capital, and many have taken skilled, young people with them, helping to create an all-new demand for rented property away from the area in which it previously appeared to be thriving.
The rise of Liverpool, Manchester, Luton and other towns and cities in the so-called regional England, has meant that the property market is now a more geographically diverse animal than it has ever been before, particularly when it comes to the private rented sector. And new data seems to suggest that this is increasingly the case, with London surprisingly becoming one of the least favourable places to invest in the modern market.
Rise of the regions
According to the latest HomeLet rental market index, over the past month, there has been something of a recovery in the rented market, which had been stifled somewhat by Brexit, the snap election and other related political uncertainty. The report states that after falls of 0.3 per cent and 0.2 per cent respectively in May and June, the annual rental price change in July saw a return to growth.
The £925 per calendar month average recorded in July was, in fact, 1.1 per cent higher than at the same time last year. It may not seem a lot, but it’s a return to positive growth for investors who had experienced a couple of months of temporary stagnation for the first time in the market since 2009.
However, even as the market continues to return to a much healthier state, it’s London that lags behind, surprisingly. So often seen as the leader of the pack, it’s a bit of a culture shock to see the capital sit in a position where it is so far from the top of the leaderboard. The 0.6 per cent fall recorded in July in Greater London actually represents the fourth month in a row that rental prices in the capital have dropped on an annual basis, and shows just how far behind the rest of the UK it currently is.
But what is behind this change in fortunes? For so long, London was the top performer in the country for British investors, but now, it all seems to have changed. The answer is simple; a much more diverse and competitive market in general has meant that tenants have started to spread away from London in search of jobs and places to live. This has allowed investors to follow suit, and we now have a much more competitive market nationwide, where many other cities are flourishing and growing alongside London at long last.