Just as house prices can vary hugely across the different UK regions, so can rental costs, and it is something for both property investors and tenants to think about.
The UK regions all offer something very different to those who live there, from the beaches of the south west to the countryside of Yorkshire and the Humber. Job prospects and options can vary, too, although there has been an increasing amount of ‘levelling up’ meaning many regions’ prospects are improving.
The housing markets in the various UK regions, too, are of course very different, although along with the generalisations, each region will have a broad range of different property types and styles. London and the south east are known for being expensive, for example, while the north east is traditionally affordable.
Some recent analysis conducted by Alan Boswell Landlord Insurance has honed in on these variations, looking specifically at the rental markets in each area and how rental prices compare to each other, and also to the relative average salaries that people are earning in these regions.
For tenants thinking of potentially relocating, as well as property investors taking everything into account when considering their next investment, this information can be extremely useful to paint a picture of what each area might entail.
Rental/income ratio in the UK regions
Not only is the north east of England the cheapest place to rent, with the average household spending £115.38 per week, according to the report which used official government data, but it is also the place where tenants spend the smallest portion of their income on their accommodation.
The median weekly income per household in the north east is £490.60, meaning renters spend just 23.5% of their income on their rent. The report does point out, though, that Newcastle is more expensive than the regional average, with tenants spending an average of 31.85% of their incomes on rent.
Alongside the north east, other more affordable UK regions – which presumably can be therefore seen to offer a better quality of life for those who have more disposable income – include Wales, Yorkshire and the Humber and the north west.
In the north west, for example, home to Manchester, Liverpool and Preston, the average household earns £504.50 per week, and spends £140.77 on rent, which is 27.9%. In Yorkshire, median weekly earnings are £499.40, while rent costs £138.46, equating to a 27.7% ratio.
At the other end of the scale, it comes as no surprise that London is not only the most expensive place to rent, with median weekly rents costing £346.15, but it is also the least affordable when taking income into account. The average median income is £645.80 per week, meaning 53.6% of earnings go on rent.
While London is attractive to many tenants and property investors, being the country’s capital and home to a lifestyle that you can’t necessarily replicate elsewhere, its lack of affordability can be a major disadvantage, and is why many people increasingly look to the likes of Birmingham and Manchester for city living.
House price variations
Unsurprisingly, house prices in the UK regions can vary drastically, as can the ongoing performance of each area, too. This can be influenced by things such as ongoing regeneration projects, as well as affordability, as demand may increase in cheaper areas during times of financial difficulty, for example.
In the most recent Nationwide House Price Index, which breaks down house prices performance as a whole as well as across the UK regions, the picture is vast and varied. It also shows a price correction, which is in line with what most industry experts had forecasts after the post-Covid surge in the market.
The West Midlands is one of the top performing UK regions this quarter in terms of holding its prices – with a 1.4% quarterly increase bringing average prices there up to £236,476. Meanwhile, Scotland saw a -3.1% quarterly drop, bringing prices to £172,676.
Investors may be keeping an eye on such house price indices, but it is also worth noting that within the UK regions are micro markets where what is happening in the wider market is not reflected. Areas where demand is high are unlikely to be as affected by the current price correction.
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