21 Sep IS THERE A NORTH/SOUTH DIVIDE WHEN IT COMES TO PROPERTY INVESTMENT?
There’s no doubt it’s been a turbulent year with some drastic fluctuations in the property market due to the global pandemic.
We’ve seen the sudden cessation of activity due to lockdown followed by a buoyant recovery. But when it comes to affordability, what hasn’t changed has been the divide between north and south.
Northern cities see bigger gains
Earlier this year, major cities in the north saw gains that eluded most southern cities.
Zoopla’s Cities House Price Index for January 2020 reported Glasgow, Liverpool and Belfast recording rises twice the level of the average over the past decade. The house price to earnings ratio in London was 12.7, but in Glasgow, it was just 3.7.
The index showed that the cost of an average home in major UK cities increased by 3.4% in the preceding 12 months, but this included significant regional variations. At the time, it was predicted that properties in the more affordable cities could enjoy gains of 4% while properties in London would rise by only 2%.
Edinburgh saw the strongest growth of 5.4% while Manchester experienced growth of 4.7% and Leicester was 4.5%. Meanwhile, in Oxford, growth was down by 0.4%, and Southampton saw an increase of just 1%.
Strong northern surge in estate agent enquiries
Recent research by Rightmove revealed that buyer enquiries have been strongest in the north of England. Current housing market activity data showed that the increase in people emailing or phoning estate agents has been higher in the north.
Activity has been healthy in Wigan, Rochdale, Hereford, Scarborough, Wilmslow, Bradford, Bolton, Rotherham and Accrington. Each of these areas saw a rise in buyer enquiries of between 56% and 77%.
This data includes regional and city figures and shows buyer enquiries have been strongest in the areas with lower costs of properties and higher affordability. Newcastle-upon-Tyne saw a 54% increase in buyer enquiries compared to London, where the increase was just 19%.
Landlord investment moves out of the capital
Research by London estate agency, Hamptons International, showed that there’s been a 31% decline in landlords investing in the capital since 2010. But there’s been an increase of 34% of London property investors buying in the north and the Midlands.
Again, the reason is affordability. The research by Hamptons showed an average house price of £152,340 in the north-west compared to an average price of £353,400 in the south-east.
Mortgage activity levels have borne out these findings.
Nick Sherratt, MD and co-founder of Mojo Mortgages, commented, “Our research has shown that there is a clear north and south divide, with areas in Scotland and the north-west, Liverpool in particular, generating strong yields. Property prices in the north are also known for being low, therefore, making these areas incredibly investable.”
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