Why invest in property in Liverpool over Manchester?
For investors looking beyond the expensive and saturated London market, Manchester is often identified as one of the UK’s leading property hotspots.
However, there are many locations where buyers can benefit from the attractive combination of relatively low entry prices and strong potential for growth. One of the most notable examples is Manchester’s neighbour in the north-west: Liverpool.
With the Manchester property market recently experiencing an influx of new-build homes and attracting more and more attention from buyers, some investors may suspect the city’s property market is approaching its peak.
Liverpool’s property market offers an attractive alternative, with many significant factors going in its favour. Here are some of the key qualities of this city that make it an exciting option for buy-to-let investors:
Low prices offer scope for growth
Along with rental yield, capital growth is one of the crucial factors buyers must consider before committing to a property purchase in any location. When entry prices are relatively low, the scope for growth is more substantial and any capital appreciation that occurs in the market represents a higher percentage of the buyer’s initial outlay.
In the latest UK Cities House Price Index for June 2018 from Hometrack, Liverpool had the lowest current average price of any of the 20 cities surveyed: £121,900.
This figure represents a discount of more than 26 per cent on Manchester’s current average of £166,100, and is less than a quarter of London’s typical price of £494,800.
Furthermore, where year-on-year growth in prices is concerned, Liverpool ranked second with a 7.2 per cent increase, narrowly behind Manchester’s 7.4 per cent and ahead of Birmingham, Leicester and Cardiff, which completed the top five.
This combination of strong growth and comparatively low prices makes Liverpool an enticing prospect for investors.
Looking to the near future for regional housing markets in the UK, Richard Donnell, insight director at Hometrack, pointed out that property owners could see a repeat of previous trends where London faltered while other cities flourished.
“The level of house price inflation seen in large regional cities during the last peak, between 2000 and 2003, gives a good indication of how much prices may rise this time around,” he said.
“If history is to repeat itself and these cities are to get back to where they were, then prices could increase by as much as 20 to 25 per cent.”
Regeneration of Liverpool’s property market
Buyers entering the Liverpool market in 2018 have the opportunity to gain maximum benefit from the city’s ongoing regeneration programme.
These efforts are supporting local businesses, employment, lifestyle and tourism, consequently feeding into growing demand for rental property in the city.
The Regenerating Liverpool organisation has recently reported on a number of key developments that could prove equally beneficial for local businesses, workers, students and families, including progress in the rollout of ultrafast broadband.
Tens of thousands of homes and businesses are now in the final stages of being connected to faster and more reliable fibre-to-the-premises broadband technology.
Kim Mears, managing director of internet infrastructure operator Openreach, said: “Liverpool already has a thriving digital economy with widespread access to high-speed broadband – with more than 97 per cent of premises already able to access superfast speeds. We’re taking this to the next level by working closely with key partners across the city to build a fibre-to-the-premises network capable of 1Gbps speeds – that’s about 24 times faster than the current UK average.”
One of the key focuses of Liverpool’s city-wide regeneration project has been the Anfield area, which is famous as the home of Liverpool Football Club’s home stadium. A £260 million local redevelopment scheme launched in October 2012 will deliver results including 1,000 new homes.
Elsewhere, exciting developments are underway in areas such as the Knowledge Quarter, where £1 billion is being spent on various buildings, workspaces, enterprise zones and other facilities to support the science, health, technology, culture and education sectors.
Initiatives such as these are helping to make Liverpool more economically successful and a more attractive place to live, which is highly encouraging for local property owners.
Demand for different property types
Tenants are showing increasing demand for various classes of property in Liverpool, meaning investors have a number of different asset types to choose from.
The city is home to a vibrant and growing student population, with an increasing number of people drawn to its attractive lifestyle and wide choice of higher education institutions.
A recent study by Totally Money highlighted the local student community as a key reason why Liverpool was ranked the top UK city for landlords, based on the rental yields available.
Liverpool’s L7 and L6 postcodes took the top two spots in the ranking thanks to their estimated yields of 11.8 per cent and 11.5 per cent respectively, ahead of Manchester’s M14 district in fifth place.
Joe Gardiner, head of content at the credit reporting firm, noted: “With students flocking to university cities year after year and looking for a place to live, it’s no surprise the student market is a dependable one for landlords.”
Liverpool student accommodation investments have proven to be lucrative for buy-to-let property investors in recent years however, it’s not only the student demographic that is showing demand for housing in the city. Recent research from real estate consultancy JLL highlighted how the city’s total population has been growing steadily since the turn of the century, rising from a low point of 442,000 in 2001 to approximately 500,000 in recent years.
As the city continues to enjoy economic success and provide opportunities for businesses, employment prospects will improve and there will be more demand for homes from young professionals and families.
Furthermore, Liverpool continues to hold strong appeal as a tourism destination, making local hotel rooms a profitable option for investors. Recent figures from the Office for National Statistics revealed that the number of overseas visitors to the city increased by a quarter in 2017, rising to 839,000 from 671,000 the previous year.
Best places to invest in property
For buy-to-let investors searching for an entry point into the British property market, it’s clear that Liverpool investment property has a lot to offer. Boasting attractive affordability, growth potential and demand for housing, this great British city has all the qualities to rival any other property investment destination in the UK.
If you are considering whether you should invest in Liverpool, contact Experience Invest today to request your complimentary property market forecast report.