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Is the North the new South? Changing dynamics in the UK’s property markets – Moloney

by: Adrian Moloney, sales director at OneSavings Bank
  • 09/01/2019
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Is the North the new South? Changing dynamics in the UK’s property markets – Moloney
Historically, the property markets in the North and South of the UK have acted very differently but signs are this is changing, perhaps even harmonising a little.

 

In the South the property market has primarily been driven by London, experiencing higher house price growth over the last decade and providing buy-to-let landlords with a fertile hunting ground.

But growth in the South is slowing, led by a cooling in the rise of property values as house prices may have reached their zenith.

So is the North going to continue to be of interest to property investors going forward?

Estate agent Savills forecast house prices to rise the most in northern England, the Midlands and Wales over the next five years.

Indeed, it predicts the North West will see the fastest growth in house prices, up 21.6%, followed by Yorkshire and Humberside (20.5%), the East and West Midlands and Wales (19.3%) and the North East (17.6%).

In comparison, Savills estimates growth in London of just 4.5%, with 12.4% for prime central London.

With these regions expected to witness significant house price growth in the next few years, the capital gains alone would be attractive to property investors as higher yields usually provide greater or clearer affordability and makes our job as buy-to-let lenders easier to approve funding for.

 

Yields, returns and demand high

Kent Reliance’s latest Buy to Let Britain report looked at the current yields within the private rented sector (PRS) by UK region.

It found that the North West had the greatest rental yields at 6.2%, with Yorkshire and the Humber at 6% the next in line.

Areas where landlords could expect the greatest annual returns included the North West with 11.7% and the East Midlands at 11.2%.

Demand for properties in the North and Midlands is also growing, particularly in cities such as Liverpool, Manchester and Birmingham which have had significant investment in their infrastructure.

This has led to more jobs in these regions, while continued high prices in London have seen young professionals choosing to stay put close to the university cities they studied in.

These changes also make cities appealing to those looking to relocate.

Indeed, the Hometrack UK Cities house price index found prices in these cities had gone up by over 6% in the last 12 months as demand grows.

So for brokers whose clients are actively researching the northern property market for the first time, consider those lenders who have an active presence in the locality and understand the local market dynamics.

 

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