With more investors setting their sights on the North West and Yorkshire, these areas are expected to see some significant house price growth in the coming months and years. With COVID-19 shifting demand for housing outside of London, any changes in housing prices are expected to be long-lasting.
London is no longer the dream city for professionals, families and young students it used to be: COVID-19 all but destroyed tourism for a couple of years, businesses realised the potential of working from home, and students are preferring to stay closer to home after being separated from their families. As a result, more and more property investors are picking up properties in select areas of Yorkshire and the North West.
According to Savills, average house prices in the North West could increase by as much as 30% in the next few years. This could outpace London’s house price growth rate by 200%. This data is calling out for property investors to get ahead of the game and start investing in the right area to reap the most considerable benefits.
Lucian Cook, head of residential research as Savills estate agents, said that the “initial outlook for 2021 looked to be complex and uneven at best.” Despite this, the agency has been forced to revisit its predictions after the sector’s surprising and reassuring performance during the start of this year. This change in outlook can be attributed to pent-up demand, the relaxation of social distancing measures, and the speed of the vaccination programme.
Savills revised predictions show average property prices in the UK increasing by 4% by the end of the year, with an average growth of approximately 21% within the next five years. If this pans out, then the average asking price for a UK home would be just slightly under £280,000.
However, there is still some disparity in property price increases between certain regions of the country in these expectations. According to Savills, some North West regions could see average property price increases of 28.8% within the same time. In Yorkshire, homes could increase in value by as much as 28.2%.
Looking back at London, the five-year growth prediction indicates an increase of only 12.6%, seeing property prices in Yorkshire and the North West grow more than twice London’s speed.
The three consecutive lockdowns have contributed considerably to these predictions, with many people realising they don’t live in a home they truly love. This could be because of location, indoor space, lack of garden space, or they have acquired a new job. Also, the extremely low mortgage rates, which could be sticking around, could also have helped shift buyer interest.
Lucian Cook commended that “the expectation that interest rates will stay lower for much longer than was predicted pre-pandemic means there remains capacity for medium-term house price growth despite the unexpectedly strong performance of last year. Across the country as a whole, five-year price growth of around 20% looks sustainable without unduly depleting mortgage affordability.”
Property investors who may have had their sights set on London need to consider the pitfalls of this location and the benefits of looking towards the North West and London. Here, they can find demand for housing and rising housing prices, allowing them to make a profit on their investments. If you are considering taking on another property investment in the North of England, Hull has also been highlighted as an up-and-coming hot spot. Find out more here.