Where now for the best profits from UK property investment?

Look at trends, value and fundamentals for clues to property hotspots

Residential property investment in the UK is not as dead as a dodo, despite what you might read in the press. Focus has shifted, that’s all. After years of outperformance, London and the South East are no longer the top performing regions. Property prices are taking a breather there, while savvy property investors are making a tidy profit further north.

In this article, you’ll discover why this shift has occurred. The knowledge that should help you as you build a property portfolio to profit throughout the property and economic trend cycle.

What’s happening with London property?

London property prices have been cooling down for a couple of years now. It isn’t surprising. After the Global Financial Crisis and the ensuing recession, the South of England (and London, in particular) was first to bounce back. Property prices followed as the local economies strengthened rapidly, boosted by a vibrant service and financial sector.

A couple of years ago we noticed that the pace of growth in London property prices had begun to slow. Affordability issues had started to weigh on the market. It doesn’t mean that property prices are falling out of bed in London, despite some of the headlines you might read in the press. Rather, they are simply growing more slowly.

The latest Home.co.uk data shows that London property prices are up 0.4% over the last year. Hardly the crash in prices that many experts were forecasting after the vote for Brexit in June 2016.

You might remember that George Osborne predicted a fall of 18%. The IMF predicted a stock market and house price crash following a vote to leave the EU. The big credit rating agencies, S&P and Fitch, said the same thing. They have all been proved wrong. But then they are all political organisations – and most politicians are buffoons. What the experts and newspaper hacks didn’t consider was the strength of the property fundamentals in the UK. And boy, these fundamentals are really strong – especially, right now, in the Midlands and the North.

What’s happening with property in the Midlands and North?

While most of the excitement for property investors have been in London in recent years, we’re witnessing a shift of focus. Investors and the wider community have woken up to the exceptional value offered by properties further north.

We’ve seen this rippling out from London, as property investment opportunities in commuter towns like Stevenage, Slough and Leatherhead have gathered ahead of steam. Now, people are waking up to the incredible potential of property investment opportunities in the Midlands and the North. The same Home.co.uk report that showed a marginal rise in London property prices also reported that property prices are up by an average of 6.5% in the East Midlands since August 2016.

Why are property prices moving north in the Midlands?

There are several reasons why property prices in the Midlands are rising at the double the pace of the national average of 3.3%.

For a start, property prices outside of London and the South East have been left behind. London property and property in a few select towns and cities across the UK have powered ahead in comparison. It means that property in the Midlands, Yorkshire & Humberside, the North East and the North West offer exceptional affordability in comparison.

Secondly, rental yields are far higher in the North. Yields have been squeezed by the rapid rise in property values in London and the South East. It hasn’t happened in the Midlands and the North, where yields have remained stable and even increased in some areas.

Thirdly, High-Speed Rail is set to transform the business and industrial landscape in the Midlands and the North. It is creating huge opportunities for businesses, creating jobs and boosting local economies.

In addition to these three influences, the population is growing above trend while housebuilders are unable to keep up with the demand for new homes.

Finally, because property price rises have lagged London and the South East over the last five years, there is more room for price rises here than further south.

Where else could property prices increase faster?

We’re seeing property prices starting to ‘catch-up’ in the East Midlands. In predicting other regions that could follow suit, look for the same or similar property fundamentals. The North East, Yorkshire & Humberside and North West all look set to take off. Next in line could be the West Midlands. There are already signs that demand for investment property here is picking up, and in Birmingham, for example, there are some outstanding property investment opportunities.

Is London property investment dead?

NO! There are still great pockets of opportunity for-profit in London. The capital is a global city. Property investment here is still a great long-term play and benefits from some of the strongest property fundamentals in the world. But to invest in the best opportunities, you need to do more than sticking a pin in the map.

To discover which are the best places to invest in London and other regions of the UK, contact one of the Gladfish team today on +44 (0)207 923 6100.

Live with passion,

Brett Alegre-Wood

Brett Alegre-Wood
August 25, 2017

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