June 18th, 2019. Luke Egan
Where is the Best Place to Invest in Property in the UK Right Now?
The housing and commercial finance market changes quickly. When deciding the best area for an investment property, it can be easy to get confused.
Here, we list the best amongst the UK property hotspots to make the most of your secured loans and maximise returns.
Cost of Purchase
In terms of trends, the UK House Price Index lists the cost of purchase as lower in the North East, Wales, Northern Ireland and Scotland. On average, the North East came out as the cheapest, with an average purchase price of £125,397. Northern Ireland comes in next at £136,669, then Scotland at £145,762 and Wales sitting as the most expensive of the cheapest areas at £159,559.
As usual, London and the South East will have higher prices for purchasing commercial property, with London sitting at a comparatively massive £459,800. While London is high, there is scope for property flipping in the city given the increase in house prices. However, generally, you’ll want to invest in those three areas to get the lowest cost of purchase.
Areas such as Newcastle-under-Lyme, which resides in the North West, boast the cheapest property prices, with a one-bedroom flat selling at an average price of £62,519. Areas like Blackpool, Bradford, North Tyneside and Sandwell come in next with the average cost of purchase prices coming in at £63,012, £64,768, £68,713 and £69,050 respectively. It is unsurprising these are all in the North or the Northern Midlands.
Of course, the property purchase price doesn’t tell the whole story. What profit margin are you likely to get when trying to resell these properties? Where is the best place to resell in the UK?
Resale Prices and Property Demand
Already companies such as Rightmove have reported that prospective buyers entering the market in the most affordable areas of the UK are being met with all-time highs for average house prices. In Wales, house prices were 4.1% higher than 12 months ago, while the North West was 2.1% higher. Consistently, despite falling in the cheapest areas to invest, sellers in Scotland achieve 8.5% above their asking price, which is an interesting correlation.
Apparently, areas of low house prices are soaring in demand, hence Scotland’s ability to sell well above asking price, as well as the general price inflation in areas viewed as affordable.
When all-time high property prices and comparatively low averages meet, it indicates that word of mouth is spreading. Positive word of mouth equates to high resale potential. In essence, opportunities to invest in property in affordable areas should be taken now as demand is coming.
However, these areas are better for resales for the above reasons. In terms of rental demand, the Midlands, London and South East dominate.
Cambridge tops the list with 57% tenant demand, followed by a hodgepodge of towns in the London commuter belt. Basingstoke tops the London commuter towns with a tenant demand of 56%. Outside of London and Cambridge, Bristol then has the highest demand at 45%, followed by York (43%), Worthing (43%) and Hastings (42%).
So, for those looking to buy-to-let, Cambridge, the London commuter belt and other medium-sized British cities should top your list. For those looking to resell down the line, look to areas of traditionally lower prices.
Thinking of using buy-to-let in one of the UK’s property hotspots? Liverpool currently tops the charts in rental yields with an average house price of £107,000 matched with an attractive yield of 10.7% in the L7 postcode.
The neighbouring L6 has similar figures, with an average house price of £85,000 and yields of 10.4%. Middlesbrough’s TS1 postcode also has desirable yields at 10.2% with an average house price of £61,000.
The trend of big, industrial Northern cities continues with Manchester and Bradford, who have yields of 10.2% and 9.9%.
For those looking for good rental yields within London, Barking tops the list with two of its postcodes, E6 and IG11, having 5% yields with average house prices of £357,569 and £305,965.
Here at Pure Property Finance, we have an experienced team of brokers who work with a wide network of reputable mortgage lenders across the UK. As a result, we can help you make the most of a secured loan or provide advice on the best area for investment property for you.
Article By Luke Egan
June 18th, 2019
Luke heads up our specialist property finance team where his focus is to drive our transactions valued between £100k and £5m.
Luke and his team manage enquiries from initial enquiry through to redemption. Luke also sits on the internal credit committee with Ben and Tom.
Luke joined Pure back in 2014 following a successful role in the Barclays property finance team that lasted over 8 years.See more articles by Luke