Why Northern Residents Should Invest in Their Own Backyard

If you live in the North then you don’t need us to tell you how great it is, but this is rapidly becoming something that investors from all of the country are now becoming aware of too.

The north of England is becoming a hotspot for property investors who want to see their money go further and have realised that there are some great deals to be had when they head beyond Watford Gap.

This means that it is also a great place to invest for those who already live in the North and know it best. With that in mind Mark Burns, Director of Pure Investor asks the question, are you ready to invest in your own backyard?

Property prices

For a long time, most property investors concentrated all of their efforts on London as they believed that this was the place that most people wanted to be in, and where the majority of major businesses were based.

However, as house prices continued to rise to astronomical levels and the cost of living in London also rocketed, it became clear that investment opportunities in the capital might not always bring the best returns.

It soon became clear that if investors wanted to get more for their money that they were going to need look a little further north where property prices have historically always been far lower than their southern counterparts.

Thee rise in interest rates and the impact of the cost of living has meant that the average property price in the north currently stands at £178,000 which stands in stark contrast to the vastly more expensive £465,000 in the south. This means that property investors in the north can buy more than two properties for the same money, which means a much greater rental potential.

Rental yields

Lower property prices are only advantageous to property investors if there is significant rental demand and high yields that can be achieved.

Recent reports have shown that rental instructions in the north east have increased by as much as 12% compared with just 6% on a national scale. This shows that there is an incredibly high demand for rental properties in the north, as so many people seem to be relocating here for jobs and an improved lifestyle.

When it comes to rental yields, Sunderland has been named the best performing city in the UK with an average gross rental yield of 8.96%. Burnley, Middlesbrough Blackburn, Hull Newcastle and Liverpool all take up most of the highest yielding cities in England.

The Midlands gets its first mention in the list of highest yielding cities thanks to Nottingham which sits in 24th position, and the south is first represented in 31st position by Plymouth. This shows the strength of the rental market in the north and why investors from far and wide are now flocking to the area.

Popular areas

Many of the investment headlines have been dominated by the likes of Manchester and Liverpool thanks to the regeneration process that has taken place in these cities. However, the north of England is full of hidden gems that offer some fantastic investment opportunities.

Leeds has also experienced its own regeneration that has led to the likes of Channel 4 now making it their base. It is the third largest city in the UK and with a population larger than both Manchester and Sheffield, it has a diverse range of properties and people who are looking for homes that they can rent.

Leeds also has the largest regional economy outside of London with a workforce of more than 1.4 million people that means there is a huge potential rental market available.

Sheffield boasts a growing student population of almost 70,000 and is now the second fastest growing economy in the UK, it is being seen as one of the leading investment prospects for 2024. The city saw its population increase by 6000 people between 2022 and 2023 and at the moment has a distinct shortage of quality rental properties, making it a prime opportunity for property investors.

With an average rent of £1136 per month, Newcastle is also a property investment hotspot. It has one the best affordability ratios in the top five major investment cities in the country thanks to its low average property prices of £184,223. The flourishing economy and strong public infrastructure in Newcastle has led to a very high demand for rental properties, which has led investors flocking to the area.

Manchester has long been seen as one of the key northern cities to invest in. The proposed HS2 network and the growth of Media City in Salford have been driving forces behind its growing popularity.

It is predicted that property investment in Manchester will continue to grow with a forecast of a 4% increase until 2027making it one of the major players in the rental market. It has a huge student population and is now a hub for many young professionals who are all looking for homes that they can rent.

Investing in the north

It is believed that as much as 25% of British investors are planning to put their money into rental properties in the north east, compared to 19% in the south. This is to top up existing incomes or save for retirements.

As investors are now being hit by increased mortgage rates, they are starting to look for areas that can offer higher rental yields with lower capital investment to plug the gap, and it seems that the north is providing them with the best opportunities to do this.

Areas such as the East Midland ad the south west which have been traditional hotspots for investment are now seeing a decrease in sales.

Most people who live in the north of England already know what fantastic opportunities are available in Yorkshire, Lancashire and beyond, and this is now attracting investors who would once only consider putting their money into southern cities.

The attractive property prices and healthy rental yields mean that there are affordable opportunities for those already in the North to invest in property that is quite literally on their doorstep.