Property development and investment firm SevenCapital has released a top 10 league table of UK cities which it claims will perform well next year for buy to let investors.
Analysing Zoopla and Land Registry data, plus agents’ predictions as well as news and demographic information about the locations, it says these are the 10 to watch.
Birmingham: In 2018 the city attracted the highest number of foreign direct investments outside London and the South East and with billions in projects either ongoing or in the pipeline. “It’s showing no signs of slowing down” claims SevenCapital.
Birmingham’s population growth has outpaced all UK cities outside the capital in recent years, leaving a chronic undersupply of homes.
“As such, property price growth since 2014 has hit 19.3 per cent with Knight Frank predicting a further 12.5 per cent by 2022. With rental yields for 2019 sitting comfortably between 4.4 per cent and 5.3 per cent according to PropertyData, the future looks bright for investors.”
Manchester: The city has already enjoyed a raft of investment which has transformed its skyline and appears to be enjoying a resulting ‘ripple effect’, arguably similar to that of London over the past decade.
Property appreciation since 2014 sits at 22.09 per cent and rental yields have remained fairly strong, reaching an average of 7.30 per cent in the Fallowfield area.
Liverpool: This is one of the highest-performing buy to let hotspots in the UK for rental yields. The postcodes L7 and L1 are regularly achieving yields of 8.2 and 8.0 per cent, with capital rises of 15 and 12 per cent in the last five years respectively.
“While price growth has slowed during 2019 after an outstanding Q4 of 2018 … [there are] exceptional career opportunities and rising tenant demand throughout the region. JLL expects that property prices in central Liverpool will rise by 2.0 per cent and rents by 3.5 per cent throughout 2020.”
Sheffield: With house prices in Sheffield still at the lower end of the scale compared to most UK cities, this could prove strong for the first-time investor, claims SevenCapital. Property prices have grown by 19.5 per cent since 2014, and an incredible 223 per cent over the last 20 years.
However, it’s the rental yields that form the biggest attraction, currently sitting at 7.3 per cent on average. With a £480 million revamp of the city’s shopping district vastly improving its amenities, Sheffield’s attraction is only set to continue to grow amongst tenants and visitors alike.
Leeds: A key destination within the Northern Powerhouse, Leeds’ population is surging, growing seven times faster than London, leaving (like Birmingham) a severe undersupply of homes.
As such the city has seen property prices grow 17.04 per cent since 2014, and 211 per cent since 2000. Its rental yields have also nearly topped the charts of cities in the UK, hitting an average of 7.6 per cent according to Property Data.
“With almost £7 billion of development in the pipeline set to see the city centre double in size, this city is on a serious mission to become the next big Northern attraction” says SevenCapital.
Leicester: With capital appreciation of 250 per cent since 2000 and 7.7 per cent in the last year (making it number one in the Zoopla Hometrack price index) Leicester is hot.
“Like Sheffield, house prices are currently at the lower end of the scale next to other regional cities, meaning there’s significant scope for future growth. A chronic undersupply of homes to meet incoming tenants means its also generating good rental yields of around 7.2 per cent according to Property Data.”
Nottingham: “A central location in the UK with direct access to many key destinations, Nottingham city centre is a natural choice as an investment destination. Well-known for its array of amenities, specifically retail, dining and entertainment, the city is already highly popular with students and professionals and its affordability is a further draw” explains SevenCapital.
Since 2014, prices have grown nearly 20 per cent.
Oxford: It has one of the strongest economies in the UK and, whilst property price growth has slowed somewhat since 2016, it ranks third in the UK for growth overall in the past 10 years.
With Oxford’s connectivity between London, Heathrow and Cambridge set to improve further with the East-West Rail and Crossrail, the city, and surrounding areas’ popularity looks set to continue.
Cardiff:The Welsh capital is certainly one to watch for the coming year. One of the fastest growing cities in the UK, recent regeneration and improvements to infrastructure, namely the new South Wales Metro, have improved connectivity and boosted sector and jobs growth.
Average rental yields in many parts of the city already sit between four and six per cent and with its population tipped to grow the fastest of most UK core cities over the next 20 years, demand looks set to continue to soar.
London: “Despite its popularity waning somewhat over recent years, making way for the UK’s regional cities, it’s still impossible to ignore the capital. Named the best city in the world by TripAdvisor, the number one city in the world to be a student and ranked second in the world’s top financial centres – behind only New York – London remains one of the best places in the UK, and in fact the world, to invest” insists SevenCapital.