(Commonwealth_ The UK property market has experienced considerable changes over the years, influenced by government policies, economic fluctuations, evolving trends, and unprecedented events such as the COVID-19 pandemic. However, despite these challenges, property investment remains a popular choice for many, with the housing sector continuing to show resilience and steady price increases. Investors often view the housing market as a “safe haven,” providing stable returns over an extended period. This includes the rental sector, which has witnessed significant growth due to tenants’ high demand outpacing the availability of homes.
For anyone looking to invest in property, understanding the shifting market dynamics and trends is crucial. Location is a key factor, and there has been a noticeable shift in recent years with the northern regions of the UK outperforming the south on several key metrics. Areas such as the North East, North West, and Yorkshire and the Humber have seen the fastest growth in house prices over the past decade, according to major property indices like Rightmove, Halifax, and Nationwide. This has drawn the attention of landlords, who are seeking capital appreciation by focusing on these areas.
The relative affordability of the north of England compared to the south is one of the main draws for investors. Property prices in the north have increased at a faster rate than in the south, but they remain more affordable overall. For those looking to diversify their portfolios or invest at a lower entry point, the north offers better value. According to the Office for National Statistics (ONS), the average property in England in 2023 cost 8.3 times the full-time average salary. However, the affordability ratio in the north is significantly lower, making it easier for buyers and investors to enter the market. In contrast, in London and the south of England, property prices have risen steeply, leading to affordability ratios above 12 in 82% of local authorities in the capital.
Tax changes have added another layer to property investment decisions. The Labour Party’s recent budget included measures to increase the stamp duty surcharge on additional property purchases from 3% to 5%. This makes it more expensive to invest in property, particularly in high-value areas such as Greater London. However, investors benefit from lower stamp duty bills in the north due to the property’s value-based calculation.
For instance, the average purchase price in Greater London in August 2024 was £739,166, resulting in a stamp duty bill of £46,633 (at the 3% surcharge). In comparison, the average home price in the North East was £186,520, with a stamp duty bill of just £5,595. Similarly, in Yorkshire and the Humber and the North West, stamp duty payments were much lower, making property investment in these areas more affordable and appealing for investors looking to maximize returns.
Another crucial consideration for property investors is rental yield, which has become increasingly important in the current climate of rising mortgage costs. The north of England continues to outperform other regions in terms of rental income relative to property value. For example, the North East offers the best returns for landlords, with an average rental income of £15,160 and an average house price of £186,520, giving a rental yield of 8.13%. Other regions in the north, including Yorkshire and the Humber (7.54%) and the North West (7.84%), also offer strong rental yields. In contrast, Greater London sees much lower rental yields, with a rental ratio of just 5.56%. For investors seeking steady income from rental properties, these northern regions provide attractive returns, especially in comparison to the capital, where rental yields are lower and property prices are much higher.
