Whilst 2020 has been a challenging year, the property market – to date – has boomed, driven by changing priorities for homeowners (and renters) along with the stamp duty holiday introduced by the Government back in July. The proof is there in the pudding for all to see – every region in the country recorded a rise in house prices in September according to RICS’ September UK Residential Market survey – hitting an 18-year high.
Whether the record-breaking prices and transaction levels will maintain momentum through to 2021 or not we have yet to see, however what is certain is, either way, the market will continue to move. For investors, the question will be, now more so than ever due to shifts in priorities changing the landscape of demand across the UK, where are the top cities and towns to invest in 2021?
Here, leading UK developer SevenCapital has compiled its top ten best places to invest in UK property after analysing trends and data from multiple key sources including JLL and Zoopla, taking account of top areas for both past and forecasted rental yields and capital growth.
1.Birmingham
Average Price: £202,162
Average Rental Yield: 5.4%
Price Growth in Five Years: 14.2%
Continuing a strong run over the last five years, Birmingham once again tops the list as the best place to invest in the UK. Average rents have risen by 30% over the last 10 years and are expected to rise by 15.9% over the next four – figures which SevenCapital can pay testament to through the success of its own developments in the city, including 105 Broad Street.
With a raft of key projects upcoming and in the pipeline – notably the Midlands Metro extension, HS2 and the 2022 Commonwealth Games, the only way is up for Birmingham’s appeal, which is already being boosted as one of the top places for relocating Londoners. Its population is expected to hit 1.24 million by 2030.
2.Manchester
Average Price: £242,311
Average Rental Yield: 5.37%
Price Growth in Five Years: 15.76%
A truly Northern powerhouse where property is concerned, Manchester’s appeal continues to build momentum as a top place to invest, with house prices set to grow a further 17.1% according to JLL.
A host of career opportunities in global businesses and employment growth of 84% between 2002 and 2015 mean the city is now the top destination for young professionals in the North West.
With the Great North Rail project expected to come into effect by 2022, allowing 40,000 more passengers to travel throughout key cities in the North, Manchester certainly shows no sign of slowing down.
3.Liverpool
Average Price: £186,527
Average Rental Yield: 5.30%
Price Growth in Five Years: 8.45%
Another popular North West hotspot for renters, Liverpool boasts some of the highest yielding postcodes in the country – L1, commonly known as the Baltic Triangle, is one of Liverpool’s trendiest places to live and has delivered 8.1% annually in the past, whilst L7 has been known to deliver annual rental yields of 10%.
Whilst price growth hasn’t been as high as Birmingham or Manchester, JLL predicts a rise of 13.1% over the next four years, no doubt set to be bolstered by the £5.5 billion Liverpool Waters scheme which will deliver new public spaces and create 17,000 jobs. As far as affordability goes, Liverpool is ideal for those looking for a lower price point.
4.Nottingham
Average Price: £214,435
Average Rental Yield: 4.66%
Price Growth in Five Years: 16.92%
More affordable than the likes of Manchester, albeit on a par price wise with Birmingham, Nottingham has taken huge strides in recent years and now represents a key investment area. As with Liverpool, this city offers small pockets that achieve high yields of around 9% including the city centre NG1 postcode and NG7, which is home to the University of Nottingham – although this has slowed since lockdown.
With two major universities near the city centre and the Queens Medical Centre – a ‘super hospital’ home to 6,000 medical staff, demand in Nottingham continues to strengthen.
5.Newcastle
Average Price: £198,307
Average Rental Yield: 6.5%
Price Growth in Five Years: 6.2%
As the 8th largest city in the UK, Newcastle leads the way for investment in the North East of England. One of the most affordable locations in this top ten, Newcastle offers a strong average rental yield of 6.5%, although capital growth isn’t as strong over the past five years as other areas on this list.
That said, Newcastle has one of the best graduate retention rates in the country and is recognised as one of the fastest growing regions for new start-up businesses, both of which will likely boost demand from young professionals, which will in turn increase rental prices and thus, yields.
6.Leeds
Average Price: £268,037
Average Rental Yield: 5.1%
Price Growth in Five Years: 9.4%
Home to 800,000 people, 73% of households in Leeds are currently renting, making this an ideal spot for investors seeking long-term tenants and consistent returns.
Leeds’ economy is one of the fastest growing in the country, rivalling several European cities, which is having a huge impact on opportunities within the city – enticing nearly one in ten of those leaving London each year since 2018.
Whilst capital growth sits just under 10% over the past five years, JLL predicts an accelerated growth of 13.7% over the next five years, and 14.2% cumulative rental growth.
7.Edinburgh
Average Price: £333,691
Average Rental Yield: 4.19%
Price Growth in Five Years: 12.33%
Edinburgh is a permanent fixture in the residential investment league tables. Due to its huge popularity as a place to live and work, the Scottish capital has seen excellent price growth over the past decade, demonstrated by its slightly higher average price point than most of our top ten.
With its continually rising economy, JLL predicts a positive impact on property prices to the tune of 17.1% over the next five years – the highest growth rate of any UK city.
8.Bracknell
Average Price: £383,788
Average Rental Yield: 3.98%
Price Growth in Five Years: 11.02%
With London bearing the brunt of the impact from lockdown in 2020, with lowering demand from buyers and tenants alike, the emphasis has in turn heightened on areas outside the capital, with perhaps some surprises – Bracknell being one.
Home to a host of globally renowned tech businesses such as Dell, Microsoft and 3M, Bracknell is also in the midst of a large-scale £770 million regeneration which has already boosted its appeal significantly, with Knight Frank forecasting price growth to hit 17% over the next five years.
As for its track record, Bracknell’shouse prices have risen 249% over the last 20 years yet at less than an hour away from London, it’s still nearly half the price.
9.Sheffield
Average Price: £209,405
Average Rental Yield: 5%
Price Growth in Five Years: 11.41%
Sheffield has blossomed over recent years, thanks to circa £480 million being invested into developing its retail district and a wave of further improvements to amenities. As such, desirability in these central areas have increased, with rental yields reaching up to 7% in certain postcodes.
Crucially, Sheffield is also amongst the top markets emerging from lockdown, where according to Zoopla sales were 20% higher than at the start of the year.
10.Glasgow
Average Price: £194,545
Average Rental Yield: 5.2%
Price Growth in Five Years: 15.05%
Another key Scottish city that’s now regularly topping the investment charts for property is Glasgow. Offering a lower entry point than Edinburgh, what Glasgow has in favour is higher five-year capital growth to date and a slightly higher average rental yield, both of which look set to strengthen further over the next five years at 15.4% and 13.4% respectively.
View more detailed analysis from SevenCapital.
Sources: Zoopla, JLL
For more information visit sevencapital.com.
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