In September 2017, it was reported that London house prices had fallen for the first time in 8 years at a record drop of 0.6%. The capital was subsequently deemed the weakest performing region in the UK for the first time since 2005.
According to recent news from Acadata, house prices in London continue to plummet, extending a slump that’s seen the average property in the capital lose almost 2 percent its value over the past year.
It seems as if the great divide has materialized in the UK property market, separating London from other thriving cities. According to Acadata, while values continue to fall in London, they are growing in other regions apart from the southeast. Property-website operator Rightmove has released fresh data that supports the claim of major regional growth, showing that average prices have climbed to a new record of 305,732 in April, despite a drop in London. The shifting power dynamic in UK’s major cities is becoming apparent, as efforts in expanding housing, jobs, resources and investment are becoming increasingly concentrated in areas outside the capital.
Javad Marandi, a British businessman with investments in commercial and residential real estate points out what is increasingly becoming obvious: “The best regions to invest in lie outside the capital – it’s no longer all about London.”
London Is Falling; So, What’s Rising?
Various lists claiming the emergence of “the next London” have penetrated the news, using undersupply and rental yields to gauge where, exactly, business in the UK property market is shifting. What investors know when it comes to such lists, is that repetition should lead them to the right places to invest their money.
Matt Stevens, Director of The Mortgage Genie, has recently shared that the buy-to-let hotspots set to offer the most competitive returns in 2018 are Manchester, Liverpool and Gateshead. Similar results were recorded in a more recent report released by JLL, which has singled out Manchester, Liverpool and Leeds as the “ones to watch” over the next five years, as it expects them to outperform other cities in the UK. The two constants found in both reports should signal to investors the immense potential in the northern UK region.
Manchester and Liverpool are serious players in the property market for their relevance as core cities for science and technological growth — this is partly credited towards the government’s push of the Northern Powerhouse.
Supporting Manchester’s title as ‘the Silicon Valley of Britain’ is a new report by Tech Nation, which has revealed that tech companies in the UK’s northern region have attracted investment at a faster rate than anywhere else in Europe over the past five years. Manchester particularly, was the key performer within the region, with tech investment growing at a whopping 668% over the 2012-17 period. This growth can be seen in the number of private equity firms in Manchester, which is 31 as of now, with a further three rumoured to be opening this year compared to the six to eight firms in the city over the previous two decades or so.
Liverpool also holds a prominent position in the upcoming digital age, with the establishment of the Knowledge Quarter, placing it on the cusp of becoming a world-class destination for science, innovation, education, technology and the creative and performing arts.
Recent news highlights an ecologist and astrophysicist from Liverpool John Moores University (LJMU) who, together, have made a significant breakthrough in the animal conservation scene. Dr. Claire Burke, the astrophysicist behind the new species-saving instrument, explains that the software used to identify galaxies is now being used to resolve problems involved with the tracking of endangered species!
With the northwest region boasting expansion in relevant industries, investors will find that their best bets lie in cities like Manchester and Liverpool.
Ultimately, the UK remains a good and safe place to invest your money due to a weakened pound and a structural housing undersupply. The best opportunities undoubtedly lie in major regional cities such as Manchester and Liverpool.
That said, it is important to note that the market in London, subject to a variety of conditions, will eventually bounce back, just as the housing market in the Midlands* bounced back from a low in 2015 to become one of Britain’s fast-growing housing markets today. On a positive note, it is during these apparent slumps that shrewd investors should invest in order to receive satisfying returns when the market bounces back.