Paying the right price on your property investment is essential, but it seems that many of us are way off the mark when it comes to judging property prices.
Whether you’re buying your next home or on the hunt for a new investment property, it’s likely that a lot of time and effort will be put into researching the market. This includes current and historic house prices, as well as future predictions and investments in an area that are likely to affect the market there, among other things.
However, the market is constantly changing, and it can be hard to keep up. Some new research by Goodmove has revealed that the majority of Brits actually wrongly estimate average house prices across the country – even in their own cities. This is important for property investors, as an area you may have previously written off for affordability reasons could actually be the perfect investment spot for your budget.
Bag a bargain in these cities
Property prices in the north of England were among the most overestimated in the study by Goodmove. In fact, Manchester, Liverpool, Nottingham, Sheffield and Newcastle were all significantly cheaper than people in the survey thought.
Nottingham average house prices in 2019 were £145,479, but those surveyed estimated them to be an average £205,523 – a huge £60,044 difference. Nottingham is a popular place to invest due to its relatively low house prices, combined with the high number of students and young professionals who live there. Away from the centre, trendy areas such as West Bridgford, Long Eaton and Beeston are proving particularly popular right now.
Liverpool continually ranks among the top places in the country for rental yields for investors, and again is supported by its below average property prices. Here, the average home sold in 2019 cost £136,517, but those surveyed estimated it at £194,841, which is £58,325 higher. The city has been the target for huge regeneration and investment in recent years, and continues to improve.
Manchester is a well-known location for property investment, but it hasn’t reached its peak just yet. While respondents in the study gave homes there an average price tag of £227,131, in fact properties are much more of a bargain at just £179,506. The north-west is predicted to see house prices increase by an average of 24% over the next five years, so there’s more growth to be had in the city.
Newcastle is another city that’s even cheaper than most people think. Average homes there came in at £166,662 for 2019, but were estimated to be £32,420 more expensive than that at £199,081. The area contains a wide mix of affluent areas with above average house prices, through to some of the cheapest properties available in the UK. The rental market in Newcastle is strong, making it a key target for investors.
Sheffield boasts house prices that are £29,352 lower than people thought in the study – averaging £166,916 compared to the £196,268 estimated. In the city centre, home to two major universities, house prices can be particularly competitive, and regeneration taking place there is providing an added boost to the area.
Top priced areas underestimated
At the other end of the scale, respondents in the survey massively underestimated house prices in some parts of the UK. London saw the biggest discrepancy overall, where the average of £472,753 was undershot by a massive £161,844 as people guessed they could net a home there for more like £310,908.
The capital’s house prices have struggled in recent years compared to elsewhere in the UK, with the Brexit effect potentially playing a bigger role there than elsewhere, and this might have led people to downvalue the cost of a home. There are still areas there where you can get more for your money, but overall it is the preserve of higher net worth investors and buyers.
Similarly, Bristol’s house prices for 2019 were £278,533, but were guessed to be £58,447 lower at £220,086. A report earlier this year found that property prices in the city were set to outperform London in 2019, which you can read more about here.