As the financial fallout from Brexit continues it appears that London has been left badly exposed. Prime property prices which were long thought to be approaching their peak are slowing considerably since the vote.
In a similar vein average salaries have stayed fairly stagnant and the cost of living has risen significantly. Political turmoil aside, London has been seeing its inequality divide expand at a rate quick enough to see visible issues in the property market and beyond.
Annual house price growth across UK Cities reached 10.8% outstripping the 8.7% reported across the rest of the UK. Liverpool, Cardiff and Southampton saw some of the biggest quarterly price rises as property investors looked for cities where it’s cheaper to buy. The biggest three-monthly gains were in Liverpool and London, where prices rose by 4.1% between January and March. A home in Liverpool is valued on average at £113,100, while in London it is £468,100.
Cardiff saw the second biggest quarterly rise at 3.5%, while Bristol and Southampton both saw prices soar 3.3%. The smallest quarterly rise was in Belfast and Newcastle, where prices rose by 0.9%
Savvy investors will be looking to the North East and West, where yields are substantially higher and capital investment is lower: Though London gives investors unparalleled capital growth, it comes at a cost. Yields in the capital are not as good as many other cities and property prices are very high. Investors buying in the north can acquire two to three properties for the price of one in London. Landlords that are looking to invest, post the stamp duty rise, will be looking carefully at any investment, to ensure it maximises profits.
Manchester and Liverpool deliver some of the best rental yields in the UK, with Manchester recording average annual rental yields of 6.02% over five years, followed by Liverpool with 5.15% yields. An average residential property in Manchester is just £155,000, while a flat in a good area, costs as little as £120,000.
A property in Manchester can provide a 5% minimum cash rental yield and a typical 12% total cash yield, including 7% capital appreciation. Demand for rental accommodation is strong and by comparison with other regions, housing is cheaper. In comparison, yields in London and the South-East are much lower – around an average of 4.86% in outer London and 4.71% in the City, according to LendInvest. House prices in London are about five times what they are in parts of the North West, but salaries are only 30% higher.
With this good news for North West landlords and property investors comes other good news of large increases in jobs, housing and disposable income. Living conditions, opportunities and the cost of living around the North of the UK has never been better and this is allowing a revolution in development of The North. In most available measures cities like Manchester, Leeds and Liverpool are managing to outperform the capital when it comes to attracting the brightest talents and best start-ups.
The future is looking bright for the Northern Powerhouse.