The UK housing market has been experiencing a distinct north-south divide in recent years, and it continues to influence property investment trends.
The north of England – led by the North West and the North East in particular – has been outperforming the south when it comes to house price growth over recent years, with significantly faster price rises being seen in some of the region’s towns and cities compared with the rest of the country.
The latest data from both Zoopla and Nationwide has revealed a continuation of this trend, demonstrating extremely high levels of demand in certain areas, which is pushing up property values. For example, while the average house price inflation recorded by Zoopla in the year to November was 1.9% in the UK as a whole, it was 3.5% in the North West and 2.8% in the North East.
Similarly, Nationwide’s house price index (which is calculated using a different method to Zoopla, looking at sold prices of mortgaged homes) found that while values in the UK were up 4.7% year-on-year in December, house prices in the north surged by 5.9%.
When considering property investment, honing in on a location with the strongest recent house price growth can be a key strategy, as it can point towards stronger capital appreciation after purchase. The fact that the north of England is experiencing the greatest gains also points towards heightened appetite for property there, which can be as a result of growing levels of property investment as well as homebuyer interest.
At the same time, the strongest performing areas currently are also those with the cheapest average property prices, which is particularly important when looking at a property investment location during times when affordability is a key concern for many.
Property investment trends
Despite having the highest property price gains, the north of England as a whole has the lowest average house prices in the UK. According to data from Nationwide, the average home in the north currently costs £164,696, despite a 5.9% price boost.
By comparison, the average UK property price is £268,518, while homes in the South East cost an average of £336,224 – and in this region, they have increased by an average 2.3% over the past year. From a property investment perspective, buyers can therefore get more for their money, with greater appreciation at the current rate of growth, meaning higher returns in the north.
Zoopla drills down into house price trends across the UK’s major cities as well as its regions, which is another important marker when looking at property investment, as focusing on a high-growth city is a popular investment strategy for landlords.
Its latest report revealed that, after Belfast with 6.3% annual growth, Manchester was the strongest performing city with a house price rise of 3.1% between November 2023 and 2024. The North West city has topped Zoopla’s list for a number of months, as it has gone from strength to strength and remains a key property investment location.
Third on Zoopla’s top cities list is Glasgow with a 2.8% house price rise, closely followed by Liverpool, also located in the North West, which had a 2.6% increase in property prices.
For investors looking to either diversify their portfolios, or achieve maximum rental yields, assessing average property prices and trajectories can be important for long-term success, and the continued positive growth seen in these locations demonstrates strong appetite among all buyer types.
A strong outlook
Mortgage rates have a major influence on the housing market, affecting the buying decisions of both homebuyers and property investors. Rates have improved over the course of 2024, but remain higher than they were before autumn 2022, and this can mean investors are more likely to focus on more affordable areas, sometimes relying more on cash and less on borrowing.
Zoopla’s outlook points towards growth in the number of sales in 2025 compared with 2024 – up to 1.15 million over the course of the coming year compared with 1.1 million in 2024 – and this will support house price growth. The property portal predicts overall price growth of 2.5% by the end of the year, up on this year’s 1.9% growth (according to Zoopla’s methods of analysis, which uses asking prices as opposed to sold prices).
Sam Hadfield, group managing director of BuyAssociation, said: “The property market’s performance in 2024 reinforced the importance of flexibility and foresight. At BuyAssociation, our focus on regional markets and build-to-rent projects proved resilient amid broader market fluctuations.
“As an example, our involvement in Stockport’s regeneration exemplifies how targeted investments in well-connected, growing areas can yield strong results.
“All in all, 2024 has been a strong year for the market, recalibration was both necessary and ultimately beneficial, laying the groundwork for what I believe will be a steady period of sensible growth in 2025 and beyond.
“Whether you’re an investor, a first-time buyer, or a developer, 2025 looks set to offer opportunities for those ready to act.”
BuyAssociation specialises in property investment opportunities in the UK’s most exciting towns and cities, with a focus on staying ahead of the curve to maximise returns. Get in touch with one of our consultants today, or browse some of our current property investment opportunities here.
