Mortgage market in Northern Powerhouse driven by low prices and top yields

More first-time buyers are now stepping onto the property ladder in the north of England, and buy-to-let investors are following suit. 

Buying property in the Northern Powerhouse has become an attractive option for many. First-time buyers are able to attain more affordable houses in the north, and property investors are enticed by lower entry prices and higher yields.

UK Finance has released an analysis on the role of financial services in supporting the Northern Powerhouse’s economy. It found that lenders provided £23.4bn of funding towards mortgages, which helped to buy over 180,000 houses in the north last year.

Across the UK, there was an overall decline in homemovers. However, the north of England saw a steady growth of people moving house with 80,400 having moved in 2018. This is the highest amount since 2007. A recent report even revealed homeowners in the north are the most optimistic about house price growth, showing there’s more confidence in the market there.

First-time buyers stepping on the property ladder

The mortgage industry helped 84,900 first-time buyers in the region get onto the property ladder last year, which is a 3% rise from 2017 and the highest number since 2006. The north boasted the largest growth in first-time buyers than any other region in England besides the Midlands. This is likely due to better affordability in these regions. According to a recent study, the north of England offers the best value for first-time buyers.

Jackie Bennett, director of mortgages at UK Finance, stated: “These figures show the north of England has a strong and dynamic mortgage market, with lenders helping thousands of first-time buyers onto the housing ladder.

“This has been combined with a steady increase in homemovers, making it easier for buyers to find a property that suits their needs.”

Buy-to-let mortgages funding resilient rental market

During 2018, activity in the buy-to-let sector was down 10% across the UK and 20% in the south alone. The north bucked that trend with three of the five Northern Powerhouse cities featuring an increase in buy-to-let lending. This data shows that the north continues to have a resilient property market that leads the nation.

“Attractive rental yields in many northern cities have driven growth in buy-to-let lending, bucking the national trend,” added Bennett.

“The mortgage industry stands ready to work with the UK government and local authorities to capitalise on these strengths and help deliver on the full economic potential of the Northern Powerhouse.”

Liverpool seeing strong growth

Cities in the Northern Powerhouse, such as Liverpool, Hull and Newcastle, saw especially impressive growth in buy-to-let lending. Lower property prices in these locations, strong rental demand, and healthy labour markets allow buy-to-let landlords to achieve yields higher than the UK average.

Recent data even shows that Liverpool’s buy-to-let market boasts the highest average return on cash investment in the UK. The city by the Mersey also has the top two postcodes with the highest average yields in England. With affordable property prices that are on the rise and exciting developments and regeneration on the way, Liverpool is an enticing option for buy-to-let investors.

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