Preston, a modest city in the north-west of England, has seen an unprecedented rise in interest from property investors. What’s behind the boom?
Property investment in Preston is booming, with new developments, conversions and regeneration projects changing the landscape of the UK’s newest city. Major cities in the surrounding area, like Manchester, Liverpool and Leeds further to the east, are being given a run for their money by Preston’s numerous qualities as a location to invest.
Now, yet another major development, Bishopgate Gardens, is underway right in the centre of the city. The project, from developer the Heaton Group, is a renovation of a former government office building which has been sitting empty since last August, and is being converted to create 130 new homes as well as on-site retail.
The transformation of the building will be a major contribution to the ongoing improvement of the city centre, while also adding to the stock of city centre houses for the growing number of people who want to live and work there.
Thinking of buying property in Preston? Here are five things you need to know about Preston property investment.
1. Thriving rental market
This is probably one of the most enticing reasons for buy-to-let landlords and property investors to choose Preston. With a population of almost 142,000, a higher than average employment rate of 83%, and a strong concentration of students, graduates and young professionals, rental demand is vast and unwavering.
Matt Eastham of Easthams & Co Letting Agents says his firm has seen a 22% increase in enquiries from prospective tenants over the course of 2019, with rental growth of 7% from the previous year. “We expect this trend to continue over the next few years as the regeneration of the city centre gathers pace, resulting in a further influx of young professionals and families looking to make this affordable, green and vibrant city their home,” Eastham concludes.
According to PropertyData, average gross yields in the PR1 postcode are an impressive 7.5%. This figure has risen by 14% over the past five years, and is well above the national average.
2. Affordable house prices
Compared to its neighbour Manchester, house prices in Preston are accessible for a much wider range of budgets, which is a major attraction for both property investors and first-time buyers. According to Rightmove, house prices in the city right now are just under £190,000, compared to £212,000 in Manchester city centre.
According to Zoopla figures, the average income currently needed to buy a house in Preston, based on mortgage borrowing ability, is around £10,000, which is just 39% of the income required to purchase a property throughout the UK.
For property investors, this not only makes the investment more affordable with potentially less leverage needed, but also increases the scope for yields.
3. Top capital gains outlook
According to the latest house price forecasts from Savills, the north-west is forecast to see the highest jump over the next five years than anywhere else in the UK. The current expectation is for a 24% rise, with a 2.5% increase over the course of 2020.
The report from Savills states: “Over the next five years we expect to see a continuation of the trends historically witnessed in the second half of a housing market cycle, where London and the South underperform markets in the Midlands and the North of England.”
These predictions are certainly expected to encompass Preston, and many investors are keen to get their foot in the door in the area to maximise the potential price hikes. Particularly as the UK housing market has reported a general slowdown over the past couple of years due to political and economic uncertainty, there are no guarantees of major house price increases anywhere. But, based on the statistics, an investment in Preston is likely to see better capital gains returns than most areas.
4. Most liveable city in the north-west
Preston consistently ranks highest out of all cities in the north-west in the annual PwC Good Growth for Cities Index. In the 2019 edition, the city ranked 11th out of all the UK cities, ahead of Manchester, Liverpool, Birkenhead, Warrington & Wigan.
The study from the Big Four accounting firm looks at livability levels in each city, assessing factors such as work-life balance, jobs, skills, health, house price to earnings, transport and new businesses. It is a major accolade for Preston, and demonstrates what makes the area such a desirable place to live and invest.
5. Regeneration and investment
The local economy of Preston is currently worth £7.4bn, and it is expected to grow by more than £1bn over the next 10 years due to increased investment in the area. Preston city council and Lancashire county council are currently working to improve infrastructure for the city to make the area more business-friendly as well as increase office space there.
There is currently a £434m investment project underway in Preston and South Ribble, which will create 20,000 new jobs and at least 20,000 new homes. The famous Market Halls and train station in Preston have also received major investment and improvement, and new restaurants, bars and shops are continually popping up as a direct result of this regeneration. As the reputation of the city increases, Preston has secured its place as a target for property investors looking for the next up-and-coming UK investment hotspot.
At BuyAssociation, we have a number of property investment opportunities available in Preston, including Guild House in the exciting Winckley Square regeneration project. Sign up for free for more information on all our projects.