Property & Mortgages

Property investment UK 2020 predictions and hotspots

Property investment

Before predicting the trend that is likely to dominate the UK property market in 2020, it is imperative to look the factors responsible for the way the property market performed in 2019. Typically, the property market revolved around brexit and its uncertainty, taking a toll on property investment UK 2020. The uncertainty around brexit had a huge impact on the way it performed round the year.

However, despite these uncertainties there is a lot to look forward to for property investment UK 2020 as the UK property market is fundamentally relatively stable, robust and globally well-renowned which provides hedge against economic uncertainties. It has traditionally been a global choice for property investors and expected to remain so, however, varying in terms of locations. Some excellent regional growth across regional areas has pushed new developments and infrastructure improvements, paving the way for high levels of property investment UK 2020. Though the overall market activity was less during the past year as sellers and buyers held making decisions amid the ongoing brexit uncertainty and waited for more clarity around brexit, the outcome of the general elections has induced some level of certainty across the property market and buyers and sellers are optimistic in terms of property investment UK 2020.

In terms of locations, London has traditionally been the most-sought after region among investors from within the UK as well as those based overseas. However, this trend has seen a shift over the past year, with the spotlight moving away from the capital to regional hotspots and emerging cities. In fact, London was the only market which did not fare as well as other regions, seeing some quite hefty declines, whereas most of the regional markets were relatively stable.

In terms of the overall UK property market, the scenario is considered to be positive as Ryan Dobratz, who manages the US-domiciled Third Avenue Global Real Estate Value (TAGREV) fund, which invests solely in real estate securities, said his fund had been snapping up UK-listed assets ever since the referendum. It currently has around 20% in the UK.

He is also optimistic regarding London as he said, “We think that over the next three to five years, the UK, and in particular the London, property market could be one of if not the best-performers globally”.

“The reason for that is because the forecasts for some of the job relocations never materialised. People expected that 90,000 to 110,000 people were going to be moved to other locations in Europe and it ended up being closer to 10,000.

“At the same time, tech companies have been expanding in London, as well as law firms, in a big way. So, the underlying fundamentals in London are good.”

Dobratz is positive on certain parts of the retail market, noting that even if online sales increase to 25% of total sales, that still means 75% will come from shops. He also noted many retailers that started online are now opening stores to interact with their customers. This will also help them boost profitability as it is much cheaper to acquire customers in a physical location than online.

Top UK locations for property investment UK 2020

  • Birmingham
  • Liverpool
  • Cambridge
  • Manchester
  • Glasgow
  • Leicester

According to Hometrack report, Liverpool, Birmingham and Cambridge have shown the highest growth for any city in the UK over the past few months. With plenty of regeneration projects heading into 2020 and beyond, both Birmingham and Liverpool appear to be the most obvious choices for a BTL investment.

Birmingham, which has seen a 19.3% rise in house prices since 2014, topped the list and is already one of the most popular places in the UK to invest in property.

Next on the list were Liverpool, which is well known for its high rental yields, and Manchester which continues to be one of the top places to invest outside London – highlighting the strength of the property markets in the north-west of England.

The results demonstrate a continued shift towards some of the emerging regional areas of the country.

These regional cities saw much higher growth in comparison with London, which grew at 1.1 per cent during the same period.

The north

Rental yields are typically higher towards the north.

In terms of capital gains, Liverpool, Birmingham, Cambridge, Glasgow and Leicester emerged as the top five places which saw the highest capital gains, according to HomeTrack data. Liverpool saw the most impressive gains over the past three months of 2.6%, well ahead of London’s 1.1% growth over the same period, while its 12-month gains were 4.6% on average. Birmingham achieved 2.1% house price increases over the past three months, with 3.8% over the past year.

Top locations across the UK for strong rental yield investments

Liverpool, Bradford and Sheffield have emerged as the top locations across the UK with rental yields of upwards of 7-8 per cent. However, void periods at these locations are also high as SimplyBusiness says that northern landlords experience the highest void periods, with void periods as high 53 per cent in some parts of the region during the last year.

Birmingham

Birmingham is expected to be one of the most popular destinations for property investment UK 2020. It has been the top performer in the UK since 2016 and expected to continue to be so this year. According to PropertyData, Birmingham’s rental yields for 2019 ranged between 4.4 per cent and 5.3 per cent.

Liverpool

Liverpool remains a top destination for property investment due to new developments, employment opportunities and rising demand throughout the region. Regeneration in the area is playing a major role in terms of growth in the rental market. Projects such as Liverpool ONE and Liverpool Waters are set to create new residential and commercial space for residents.

Manchester

Manchester’s infrastructure is proving to be the major draw for investors. The transport for Greater Manchester project, including the Manchester Metrolink and HS2 plans, is ensuring an efficient and modern transport system around the region. As the second-fastest growing city in the UK, it is experiencing high levels of price rise.

Risk Warning:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

Comment here