Amid the months of articles covering the slowdown in the UK’s property market, it would be easy to overlook the nuances of what is becoming an increasingly divergent regional landscape. National figures, at least current national figures, belay the fact that regional and even neighbourhood correlation has been low at points over the past decade. The size and value of the property market of London and the South East skews national data in a way that anyone on the lookout for attractive investment properties will, or should be, aware of.
One detail of especial note for the property investment value hunter is that there are several major regional UK cities where house prices have still to return to their pre-crisis 2008 levels. Within the context of the salary multiples prices have reached elsewhere in the UK, that suggests there might still be comfortable room for capital growth. Crucially, rental returns in these cities are also often among the most attractive in the country, providing scope for an eventual double-barrelled return.
Some, like Belfast, are even significantly below their 2008 peak. Property prices in Northern Ireland’s capital are, a decade later, still a whopping 28% below where they were. An average selling price of £129,629 offers an interesting, if not risk-free, opportunity for investment properties. One of the key issues of the Brexit process, retaining an open border between Northern Ireland and the Republic of Ireland to the south, can be presumed a key influence on subdued property price growth. For investors willing to bet on the fact a working solution will have to be found, that presents an opportunity.
Aberdeen is another example that falls into the ‘it’s complicated’ category when weighing up the attractiveness of a depressed market for investment properties. Until recently one of the UK’s wealthiest smallish cities, though at around 208,000 still the 3rd largest in Scotland after Glasgow and Edinburgh, Aberdeen has fallen on hard times.
It’s been well publicised that Edinburgh and Glasgow have been among the most profitable buy-to-let locations over the last year or so but Aberdeen’s once buoyant market has been hit by the decline of the North Sea oil industry.
At an average of £163,200, investment properties in the Granite City can be picked up for 3% less than a decade ago. With oil prices healthier again at around $70 a barrel, following a slump to close to $30 in early 2016, production and investment in the North Sea is coming back to life. Most analysts think that over the next few years oil prices will stay around current levels, or slightly higher, which would be a boon for Aberdeen’s economy and would be expected to spill over again into a higher property prices and rents. Despite a strong last year or two, Glasgow is also worth looking at with prices having only just moved beyond their 2008 levels, at 1% higher.
In Liverpool, one of the strongest UK cities for rental returns, property prices are still 1% off their peak 10 years ago and Newcastle’s still only 3% higher. For anyone looking for investment properties, casting an eye towards regional cities that have lagged or recently dropped could be very worthwhile.