Ay ‘up, it’s not so grim up North

The UK housing market has followed a bumpy path over the past two years. However, we are constantly hearing from various sources including Rightmove, Hometrack and the Royal Institute of Chartered Surveyors (RICS), that the worst is over and the market has now returned to its inevitable upwards path. A string of interest rate hikes by the Bank of England in 2004 put a severe dampener on the market, but the reduction last August to 4.50 per cent has helped to ignite consumer confidence and increase activity in the market. Mortgage lenders are now reporting higher levels of activity, and prices are starting to pick up across the country. This spells good news for investors and homeowners who want to see their capital grow and buyers and sellers who have been holding fire are now likely to return to the market, boosting activity, demand and, in turn, prices.

An upwards trend

The general consensus that the market is on an upwards trend has been confirmed by a poll of industry experts exhibiting at The Property Investor and Homebuyer Show North, which is taking place between the 2-4 June at the G-Mex in Manchester. Over 82 per cent of those surveyed believed the UK’s housing market will see price rises over the next 12 months. When asked specifically about the prospects of the northern market, over 72 per cent of those polled believed that the region offers excellent investment opportunities, as house prices are lower than the South and not as much capital is needed up front. With high demand from workers, visitors and students in particular, the Northern market holds strong potential and is a solid opportunity for investors.

The North still remains affordable and has room to grow. Figures from Hometrack reveal that house prices have remained static in the North this month and risen by 0.2 per cent in the North West and Yorkshire & Humberside. Greater London, on the other hand, has seen inflation this month of 1.2 per cent, which, although good news for homeowners at the moment, is not sustainable in the long run. The South was also hit hardest by the price falls over the past couple of years, preventing some from moving. More locally across the North, York has seen a rise this month with house price inflation of 0.9 per cent, Manchester reported 0.5 per cent and Newcastle 0.2 per cent. This spells excellent news for potential investors and homeowners across the region.

Investment shift

While most economic activity in the UK has traditionally been centred around London, increased investment in the North is seeing this centre gradually shift. The Commonwealth Games held in Manchester in 2002 created an additional 6,100 jobs in the area, brought in £22million in expenditure and an estimated 300,000 new visitors to the city each year. The BBC’s planned move to Manchester over the next few years will bring 1,800 new jobs and considerable investment into the area. The regeneration of Liverpool as the European Capital of Culture 2008 will also contribute to a positive effect on the area. A £100 million redevelopment has transformed the Albert Docks in Liverpool into one of the city’s busiest and most cosmopolitan centres and a top heritage attraction. Canny investors will be making the most of this regeneration across the North by investing in properties in the prime areas where house prices are forecast to grow at the fastest rate.

As investment and regeneration booms, the consequences for the Northern housing market are very encouraging. From buy-to-let investors to first-time buyers looking to choose an up-and-coming hotspot for their first purchase, the area could provide strong returns by means of rental yields and capital growth.

Strong returns

Adding to the potential of property investment and buy-to-let opportunities in the North, student accommodation provides strong returns and year round rental opportunities. Many cities across the region have very high student populations, with Leeds, Manchester, Liverpool and Newcastle in particular having some of the highest applicant levels across the country. Despite their reputation, the majority of students provide reliable rental opportunities.

It is clear that many aspects of the Northern market remain conducive to long-term positive growth. With steady capital growth and good rental opportunities, everyone from seasoned investors to first-time buyers are realising the benefits of moving up North. Investment and regeneration in the area could act to boost prices in an area that currently sees among the cheapest average house prices in the UK.