The New Year brings a new set of goals for many and if investing in property is at the top of your to do list, this article will highlight the best 2018 UK property hotspots to help you make the most of your investment.
With the average rental yield in the UK standing around 3% to 5%, landlords and investors alike have been searching the country far and wide for the highest yielding properties on the market.
2018 UK Property Hotspots Map
This map shows Experience Invest’s top 2018 UK property hotspots. As investors move away from London in order to secure higher rental returns, post codes in the Northern Powerhouse and London’s commuter belt have emerged as the best for rental yields over the next 12 months.
Building on a positive 2017
Despite 0.25% interest rate increased introduced by the Bank of England in 2017 and the rise in taxes for buy-to-let landlords, 2017 remained a buoyant year for property investors.
In the year to November 2017, UK house prices increased by 5.1%, with the average property price reaching £226,071, according to data from HM Land Registry and Office for National Statistics (ONS). House prices continue to rise across the UK, albeit at a slower pace than previous years.
The average cost of renting a property in the residential market rose by 2.4% in 2018, up by 1.8% recorded in 2016. The average cost of renting a property in this sector now stands at £960 per month.
With residential property prices and rents pointing in an upward trajectory, the UK’s property market offers real income opportunities in 2018.
Elsewhere, in the commercial property market, 2017 proved an extremely positive year for investors, with figures published by CBRE UK in November highlighting overall returns of more than 10% in the nation’s commercial real estate sector.
This was coupled with forecast gains in capital value of 8.2% during the final quarter of the year, as outlined in the IPF UK Consensus Forecast report. It means more of the same will be a welcome development for the coming year, and could prompt ever greater inflows of new capital into markets up and down the country that are now primed for growth.
Indeed, Miles Gibson, head of research at CBRE UK, told Property Week: “UK property has performed steadily and above expectations in 2017 so far, with total returns now in double digits.”
Looking forward, 2018 promises to hold further gains for investors who know where and when to act.
London commuter belt towns
The traditional ‘commuter belt’ located just outside London is once again set to provide strong attraction for investors next year, with Luton in particular expected to emerges as one of the best performing 2018 UK property hotspots.
Located just 22 minutes from central London and with London Luton Airport (LLA) classified as one of only 24 Enterprise Zones across the whole of England, this is a burgeoning town that could see massive growth in the years ahead.
According to estate agent Jackson-Stops, property prices in Luton increased by 10% year-on-year making it one of the best locations in the UK for capital growth.
Buy-to-let property in Luton has also been named the best UK buy-to-let areas for 2018 in the LendInvest BTL Index. The index states: “Luton continues to hold the top spot of the LendInvest BTL Index with activity in the local market maintaining the strength in both capital gains and rental growth metrics. The buy-to-let market in Luton is supported by its status as a university town with the student rental market often offering attractive yields.”
Bolstered by the recent announcement of a significant expansion for LLA as part of the London Luton Airport Vision for Sustainable Growth 2020-2050 plan, the coming years could see increasing scope for new property development to cater for the rising number of people both passing through and staying in the area.
Meanwhile, with a continued premium being charged for property buyers within the Greater London area, commuter belt towns including Luton, Rainham, Rochester, Grays and Gravesend remain among the most attractive choices for developers at present.
Indeed, CBRE revealed in its ‘London’s commuter towns: More than just house prices and travel times’ report, published earlier this year, that these are currently the five most affordable locations for home buyers within the commuter belt, with an associated high demand for homes as a result.
Northern Powerhouse takes over from London
House price growth in London slowed to a 5.6% rise in 2017 – its lowest growth rate since 2013. Affordability in the capital has played a big part in the stagnation of the market, with an 8% decrease in the number of sales throughout the last 12 months.
However, in a stark contrast, across the north of England, the Northern Powerhouse initiative will continue to deliver a wide range of benefits for property investors in 2018. Cities including Liverpool, Leeds, Manchester and Newcastle will therefore likely prove to be attractive 2018 UK property hotspots for investor activity in the months ahead.
Illustrating the popularity of the city, Liverpool’s property market has seen a flurry of activity over the last few years, with sales volumes increasing by 8% over the last 12 months. What’s more, Liverpool has the best buy-to-let yields by postcodes throughout the UK according to Totally Money. Liverpool’s L7, L6 and L15 post codes make up the top 3 locations for the best rental yields UK 2018, making a prime location for investors.
Property values in Manchester increased by an impressive 8.8% in the last year according to Hometrack, thanks to the city’s improving jobs market and affordability. This impressive increase in property prices have made it a top choice as a 2018 UK property hotspot.
Earlier this year, prime minister Theresa May also set out a far-reaching plan to back further growth in northern industry, backed by government investment of up to £556 million, as part of the UK’s ongoing Industrial Strategy. It promises to create new opportunities for investors to enter the market in the years ahead and to support those that do in making the most of their efforts.
Stamp Duty rises push alternative assets into the mainstream
Finally, alternative asset classes will also become increasingly important to investors in 2018, with widespread growing demand across the country in terms of purpose-built student accommodation, hotels and new commercial development.
Research published by Savills shows UK investment volumes in student housing rose by 17% in 2017, with an expected increase in interest in this sector to be seen in the coming year.
Meanwhile, hospitality markets are gaining momentum all the time, with ongoing weakness in sterling against other currencies proving a strong attractor to visitors to the UK from overseas.
This, coupled with a host of new developments taking place in cities including Liverpool, Manchester and London, make hotels investment a likely positive growth area for 2018.
As previously mentioned, data from CBRE UK also highlighted continued positive sentiment surrounding the commercial property space next year, with investment volumes expected to remain roughly in line with those witnessed in 2017.
Overall, the outlook for the coming year appears extremely rosy for investors who understand the wide array of options open to them. The UK should therefore remain an ongoing hotspot for investment activity.
Indeed, Mr Gibson of CBRE UK concluded: “Whilst significant risks remain, from reduced consumer spending power, changes to US interest rates and the Brexit denouement, we anticipate robust investment volumes in the property sector in 2018.”
Alternative asset classes such as student housing, hotel suites and commercial property are set to produce some of the highest rental yields in UK in 2018.
For more information about how to secure an assured passive income from 2018 UK property hotspots, contact Experience Invest today.