Choosing the right location is key when it comes to property investment success, so it’s crucial to keep up to date with changing trends and market activity.
It might be tempting to invest in property in one of the UK’s “tried and tested” locations, where house prices have historically seen the greatest gains. However, researching options that are set to see even greater future uplifts thanks to upcoming regeneration and redevelopment can significantly boost a property investment’s success.
For example, 20 to 30 years ago, London was seen as the go-to destination for investors, with many parts of the capital experiencing huge percentage gains – which meant hefty returns due to the already higher value of property there.
Yet while the capital is still popular for those seeking a long-term property investment in a location with extremely high rental demand, it has been overtaken in recent years by the North of England, where prices have been accelerating at a much faster rate.
New research from Zoopla has set out just how lucrative UK property investment can be over the long term. It found that the average owner will have seen their property rise in value by £80,000 when they bought within the last 20 years – demonstrating that the market has always overcome relatively short-term dips, such as during the 2008 financial crisis.
A history of housing success
Looking specifically at those who have sold properties in the past 12 months having owned them for 20 years, the average gain made was £65,000. However, 71% of Londoners who sold property over the past year having owned them for up to 20 years made profits far surpassing this amount.
The South East saw a similar outcome, with 70% of homes seeing a rise in value of more than £65,000 when they sold over the past 12 months, making these the two most lucrative locations from two decades ago.
However, as Zoopla points out, the past 10 years in particular has seen some huge house price gains, and almost half (48%) of properties bought within the last decade have also risen in value by more than £65,000.
Again, the biggest capital appreciation during this time frame was to be found in the South – with 58% of homes sold in the South West having gained £65,000 in value since they were bought 10 years ago, followed by 57% of homes in the South East, and 53% in the East of England.
Property investment hotspots
For anyone hoping to hone in on the next property investment hotspot, looking closely at recent trends is hugely important.
For example, research from Yahoo News recently identified six property investment highlights in and around Manchester, where prices had risen exponentially in recent times thanks to a combination of changing trends (people wanting to live outside the city but within commuting distance) as well as redevelopment and investment in these areas.
Over recent years, the North West of England has been the strongest performing region in the country in terms of house price rises, including in Nationwide’s monthly House Price Index. This largely seems set to continue, with people continuing to seek more affordable locations than the south of England, whether to buy or to rent.
Keeping abreast of rental trends is another crucial factor for any property investment that will be run as a buy-to-let. This includes looking at new trends among tenants, such as where they want to live and what property types are most popular, as well as the locations that offer continually high rental demand.
Recent research found the landlords’ rental yields were the highest in the North East and the North West of England, and again, this has been the case for the past couple of years as demand in these areas outstrips supply.
Sitting on a fortune
Commenting on Zoopla’s latest research, Izabella Lubowiecka, Senior Property Researcher at Zoopla said: “Millions of UK homeowners are sitting on tens of thousands of pounds in property value gains since they moved into their current home, despite recent falls in house prices. Whilst house prices fell or grew modestly in London in recent years, there are areas, such as Richmond, where the market has fared much better.
“In the North West, Trafford has seen similar growth, due in part to its close proximity to Manchester and popularity with families looking to move out of the city.
“For many, meaningful capital gains can provide important financial support for their next home move. Those thinking of selling should get their property valued sooner rather than later, they never know, they could be sitting on a small fortune.”
If you’re looking to secure your next UK property investment, get in touch with BuyAssociation today to find out where the next up-and-coming locations are across the country.