Property investors in Liverpool and Manchester see biggest gains

 

Property investors who have selected stock in parts of the north west have seen the biggest boosts in their property values, alongside some of the healthiest yields in the country.

Those who purchased property in the major cities of Liverpool and Manchester have seen the strongest capital appreciation in the country over the past year, according to the latest Zoopla house price index.

The report singles out some of the places in the country that have seen the biggest jumps in house prices over the past 12 months, and the north west features heavily.

While Liverpool’s prices have risen by +10.1% in the 12 months to April, Manchester has seen hikes of +9.5% (while Nottingham also appears in the top list with house price rises of +9.7%). The north west’s towns have also seen top growth, including Warrington (+12.3%), Wigan (+12.2%) and Rochdale (+11.8%).

As the Zoopla report points out, it is largely the most affordable markets that have seen the biggest growth. For property investors, that means these areas remain key hotspots, where housing is affordable yet in extremely high demand.

The wider picture

Across the UK as a whole, Zoopla finds that house prices have risen by +8.3% over the past year, bringing the average home value to almost £250,000 – a £29,000 rise since pre-pandemic.

Zoopla also noted the same supply pressures as have been well documented by other indices, although the research found that the supply of new homes for sale is up by +3% on the five-year average. As ever, there are significant regional variations at play here, too.

Property investors will have noticed the increased competition to secure properties, with demand up by +58% in the four weeks to 24th April, compared to the five-year average.

Another factor affecting homebuyers and property investors alike is the additional homes that are now eligible for higher stamp duty rates as a result of house price rises. Zoopla estimates there have been around 4.3 million homes pushed into higher tax brackets in the past two years.

Honing in on London – a spot which has become increasingly unaffordable for property investors and homebuyers – prices have risen by +3.6% in the year to April. For flats, the average price has gone up by just +2% since the start of the pandemic.

Property investors competing with first-time buyers

One thing many property investors have in common with first-time buyers is the search for a bargain. To turn a healthy profit, buying at a reasonably low price point is one thing that can aid the bottom line. Of course, choosing an up-and-coming area with high rental demand is another key priority.

According to Zoopla, the average first-time buyer home has gone up in price from £197,600 at the start of the pandemic to £225,000 now.

“This means the average first-time buyer must find an additional £4,000 for a 15% deposit, and an additional £5,000 in added income every year to meet the criteria of a home loan which is within the 4.5 x income threshold,” notes the report.

For many first-timers, this could mean more reliance on family and other sources of income in order to raise a deposit. With rising interest rates, some will also have to think more carefully about which mortgage they choose in relation to the deposit they can raise.

What’s the outlook?

Unsurprisingly, Zoopla’s predictions largely follow those made by other property market pundits; that the ongoing supply shortage will continue, despite some easing, and this will support continued house price growth.

It adds: “However, the market will not continue to operate at its current pitch throughout the rest of the year. The economic headwinds which are already being felt in households across the country, will start to have more a material impact on the housing market in H2.”

This could put some downward pressure on house price growth, says Zoopla, adding: “These headwinds include the rising cost of living, and the rising cost of mortgage borrowing.”

Property investors considering their next move might be encouraged by the fact that demand in the market seems set to remain strong, though, particularly across certain locations.

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Property investors in Liverpool and Manchester see biggest gains

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