House prices in the South, particularly London, are in decline whereas the North and North West are becoming more desirable. The latest Hometrack figures saw house prices falling in real terms in London while Manchester, Leicester and Liverpool all grew by more than six percent per annum.
This is quite the turn of events. Historically, London has always outpriced and outgrown Northern house prices, not least because it can offer the hustle and bustle of city life and plenty of jobs. But it’s becoming common for companies to move out of London, particularly those in the technology sector. Manchester is very popular, and industry in the North West is booming with new tech firms. The Silicon Canal is working hard to create a tech ecosystem in Birmingham and MediaCityUK is attracting a lot of talent, too.
These initiatives actively affect the property market – they attract buyers looking to live somewhere affordable and commutable. Altrincham was recently named the best place to live in the region and forty percent of the houses in our latest development in Cheshire sold on the opening day. In fact, a lot of our properties are being sold off before they’re even completed. Prices in the region continue to increase by four to five percent per year, and we’ve exceeded estimated sales prices on all our developments so far.
No one can deny that London will always be an important place for property investment. But it would be foolish to ignore the fact that there’s a lot of value in the North West of England. If companies are willing to invest their money and resources outside of London, it makes sense for landlords to do so to.
Largely due to the tapered removal of tax relief on mortgage interest, three percent stamp duty surcharge and tougher mortgage rules, buy-to-let investment has dropped 80% in three years. Buy-to-let is not completely dead and some strategies may still work. But would-be landlords should consider their other property investment options, including alternative products like peer to peer property loans, development finance, and lending via an Innovative Finance ISAs secured against property.
For example, The House Crowd has a property development arm known as House Crowd Developments that helps to crowdfund exciting new property projects in the North West. Our Egyptian Mill Development in Lees raised £1.2m in just 24 hours. These crowdfunding schemes offer investors a typical interest rate of 10% p.a. over a 15-month investment term, without the hassle of managing tenants and a property.
With so many years of talk about the importance of investing in property, it makes perfect sense that the younger, millennial generation are keen to get on the property ladder. However, where they differ from their baby boomer predecessors is their willingness to invest in different schemes. Because they are willing, they are being helped by exciting new property developments such as those run by HC Developments, and are getting more involved in crowdfunding opportunities.
Crowdfunding can fund much needed new housing developments – it’s a socially responsible form of investment as many of the developments are part of the government’s Help to Buy scheme. These invested monies play a part in addressing Britain’s ongoing housing crisis, while enabling investors to earn consistent returns of around ten percent per annum with a strong risk-reward ratio.
Ultimately, things are cyclical and London property prices will bounce back. Brexit has created uncertainty and that’s causing fluctuations. But for now, savvy property investors are looking to the North West for the best returns. As infrastructure improves and new working opportunities become available, house prices outperform the South. So, it’s hard to blame new families and working people for wanting to move out of the capital. If you’re looking to invest in property up North, it just might be the right time to join them.