It’s been a rough ride for London landlords in recent months, as investors shun the capital and head north in search of lower property prices and higher returns. But what can you really buy in northern cities for the price of a London pad?
House price growth in the UK weakened in July 2017, with London being the third worst performing region, according to Office for National Statistics (ONS) data. The average price in the capital rose by just 2.8% over the year, while it was up by only 0.3% on a monthly basis.
In contrast, the North West of England experienced greater month-on-month growth, with the average price up by 1.4% between June and July, reaching an annual increase of 4.7%.
Home to urban hotspots such as Liverpool, Manchester and Salford, northern cities are looking strong when it comes to rent price growth, leading buy-to-let investors to give serious thought to these locations.
The crown in the jewel of the northern cities remains Manchester, with its rapidly growing suburbs, where investors received an average yield of 6.9% in the year to July.
The CEO of agent Properties of the World, Jean Liggett, says: “Properties of the World has been active in Manchester’s property market for many years now, having been quick to identify the city’s potential as a cornerstone of the UK’s buy-to-let boom.
“The huge demand projected for homes in Manchester and the low property prices make this northern city far more attractive for investors than the capital.”
When it comes to residential investment in northern cities, latest data analysed by Strutt & Parker shows that three-bedroom homes are the biggest winners, especially for young professionals, who are looking for properties that offer more space and better value for money than London.
A typical three-bed in the capital costs almost £820,000, according to research by Savills, a sum that is out of reach for most.
Meanwhile, a three-bed apartment a few minutes from Manchester city centre costs just £242,495. In the heart of Salford Quays, a luxury three-bed apartment is £375,995, while a three-bed flat in the award-winning Manchester Waters development is just £229,995, with a 6% return for investors.
You could also snap up a £226,000 property just a short walk from Manchester city centre, which is four times cheaper than the average three-bed price in London, and with a 5.5% net yield.
With the latest study by LendInvest showing that northern cities are challenging those in the South East where returns are concerned, it looks like a move up north is on the cards.