2017 UK property hotspots revealed
The UK is a prime location for property investment. A continued undersupply of housing and an inability to keep up with demand, has created a strong demand-supply balance across the country.
House prices have experienced a long period of growth and this is not expected to slow soon. The experts at Reuters believe that house prices will increase by 2% across the country in 2017.
Highlighting the demand for a wider range of new housing, average rents in England and Wales reached an all-time high of £887 per month in October.
Despite buy-to-let tax changes, investors continue to flock to the UK’s property market. If you intend to expand your portfolio this year, check out our 2017 UK property hotspots.
Here are some tips for investors who wish to capitalise on the UK’s buy-to-let sector.
Why are investors avoiding London?
London estate agent, Portico, has reported that transaction volumes are now 50% lower than what they were before the 2008 crash.
November recorded the first monthly decline since the recession, with prices dropping by 1.1% in the City of Westminster. If transactions continue to stagnate, the estate agency believes that prime property prices could decrease between 6% and 7% in 2017.
It is undeniable that Brexit has had an impact on London’s property market. While transaction and values have dropped, experts believe price decreases have been underpinned by a fall in the value of sterling.
Opportunistic buyers – especially those based overseas – are making the most of the favourable exchange rates currently available. Property in London is potentially more appealing now than what it has been in the past.
However, many investors are looking outside of the capital for their next property investments.
In a recent interview about the UK’s property market, Kames Property Income fund manager, David Wise, explained his outlook on the sector.
“In general we are buying in locations that are fundamentally cheaper and can give us higher income returns, typically in big northern cities such as Manchester, Sheffield, Leeds and Newcastle,” Wise told The Telegraph.
The rise of the commuter belt investment
Properties in London’s commuter belt have become an alternative for buyers who are unable to afford property in the capital.
According to Savills, buyers can save an average of £3,000 each minute further out of London by train.
The company found that the average price within a 30-minute commute of the capital by train is £485,000, compared to £606,000 price tag of the average London property.
The demand for housing in some areas outside of London is now so high, prices have started to increase faster than London.
Figures from Land Registry have shown the prices have increased at a faster pace in Slough, Luton and Reading.
Annual house growth in London was up 13.5% much lower than the 19% recorded in Slough, the 17% recorded in Luton and the 14.6% increase in Reading.
And commuter belt towns are not just attractive for buyers.
Renters are also able to get more for their money the further they live outside of London. Many renters can afford to rent an entire house outside of London, rather than renting a room in a HMO in the capital.
Investors should keep an eye out for properties that fall within a 30-minute train journey outside of the capital as these will be great 2017 UK property hotspots. Properties with good transport links should provide investors with strong returns for many years to come.
The Northern Powerhouse
In 2016, Experience Invest outlined its top northern property hotspots and named Manchester, Liverpool, Newcastle, Sheffield and Leeds as locations property investors should consider.
One year on, these hotspots have not changed according to the company’s property experts.
In fact, the locations named have been propelled even further into the limelight, in light of the government’s announcement of their preferred route for the new high-speed HS2 rail link.
It is thought that the new plans will boost the economy by billions when the HS2 link opens, with cities including Leeds, Manchester, and Sheffield all set to benefit from the route.
The Transport Secretary, Chris Grayling, said that the preferred routes would reduce times between key cities in the Northern Powerhouse. Travelers will be able to move between Leeds and Sheffield in only 25 minutes, and between Leeds and Manchester in 30 minutes, reducing travel times by 50%. Read more about the preferred HS2 route here…
Property prices in the north
Properties in key locations in the north continue to attract investment as they are often much cheaper when compared to property in London. This coupled with strong market fundamentals means that many investors can secure higher rental returns than southern counterparts.
Changes to Stamp Duty tax introduced in 2016 have meant that buy-to-let investors pay an additional 3% on top of normal rates. Lower entry level properties mean that upfront savings can be made on Stamp Duty taxes.
2017 UK property hotspots
There are many opportunities across the UK for profitable buy-to-let investments. Despite changes to Stamp Duty rates and reductions to tax relief, investors will still be able to generate an income from property in 2017 and beyond.
In the New Year, investors should look at their property portfolio and determine whether it is working for them and keep these 2017 UK property hotspots in mind when searching for new opportunities.