Best Places to Invest in UK Property 2020
Before we look at the Best Places to Invest in UK Property 2020 we have to look at the current market. 2019 has, as you’d imagine, typically revolved around Brexit. Britain’s official withdrawal from the EU has dominated the media and had a huge impact on the property market, driving uncertainty at every turn. That said, the deadline is fast approaching. As we look ahead to 2020, we’re examining what the UK and the Buy-to-Let (BTL) market post-Brexit could look like.
For investors that want to invest in a relatively robust and stable market, the UK remains a solid choice. As the preferred choice for many overseas buyers in 2019, the excellent growth of regional cores has pushed new developments and infrastructure improvements, putting it firmly at the top of investor wishlists for the new year.
With the spotlight moving from the traditionally popular London market to regional hotspots and emerging cities, where are the best places to invest in UK property in 2020? We’ve done the research for you and here’s our top 10 list of the UK’s best cities and towns for property investment in 2020.
Best areas for UK Property Capital Gains
|City||Average price||Peak-current||Last 12 months||Last 3 months|
Over the last three months, according to the Hometrack report Liverpool, Birmingham and Cambridge have shown the highest growth for any city in the UK. 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.
Comparing these cities to London, which grew at 1.1% over the same three month period, regional cities have shown much more positive growth.
If you’re looking at capital appreciation as an investment strategy, read our ‘Top 5 Emerging Hotspots to Invest in UK Property 2020‘.
Towns on the Rise
Property Price Growth since 2014: 20.77%
Regeneration Projects in 2020: The Lexicon, Princess Square and the Deck, The Grand Exchange
A prime investment location in the South-East, Bracknell is a key market attracting large-scale regeneration, a broad concentration of global commercial brands and all-time demand from the UK technology sector.
In 2019, Bracknell property is worth an average of around £362,000. Despite price rises of 249% since 1999, it remains much more affordable than its surroundings – London sits at around £729,100 while nearby Guildford sits at £534,993. For investors and tenants that want direct access to London, Heathrow Airport and other key destinations in the South-East, Bracknell remains a much more accessible market.
One of the main drivers of this demand is the ‘2032 Bracknell Town Centre Vision’. This £770 million regeneration project is completely transforming the Bracknell landscape whilst creating new residential, commercial and retail space. As part of a four-phase plan, it includes the Lexicon shopping centre – a £240 million development that has kickstarted regeneration throughout the town.
As you’d expect from an established commuter town under 20 minutes from London, Slough is largely recognised as an investment hotspot due to the connectivity it can provide. Combined with an affordable property market and one of the largest trading estates in Europe hosting global brands, Slough is building enviable tenant demand and attracting investment of over £1 billion.
46% of homes in Slough are let to renters from London and with 87,000 jobs contributing to a £9 billion economy, this commuter town is setting the foundations for incredible demand. 48,000 commuters to London each day demonstrates the appetite for affordable living outside of the capital.
Like many towns within the London Commuter Belt, Slough is being revitalised via several regeneration projects. Led by the Slough Urban Renewal (SUR) project, nearly £1 billion has been funneled into Slough, creating game-changing developments for the retail, commercial, leisure and residential sectors. Two key examples of Slough’s regeneration so far? The Curve and The Centre – two cultural touchpoints that are both iconic landmarks and directly meeting tenant demands.
Top locations for strong Rental Yield investments in the UK
If you’re looking to achieve high rental yields in the UK, typically the further north you go the higher the yield but this comes with a hidden danger of void periods. You can achieve rental yields upwards of 7-8% in postcodes across Liverpool, Bradford and Sheffield but proceed with caution – according to SimplyBusiness Northern Landlords attract the highest void periods with reports of up to 53% of northern landlords experiencing voids during last year. Remember, a high rental yield doesn’t tell the full story. Tenant demand is just as important if not more, so jumping into an area with a high rental yield on paper isn’t always the best tactic.
Instead, we suggest exploring areas such as Birmingham and Reading which are still experiencing residential undersupply. Between 2011 and 2016 for example, around 8,000 homes were completed in Birmingham whereas demand was closer to 20,000!
Top 10 Places for Property Investment in 2020
The UK rental market is growing at an unprecedented rate, forecast to make up a quarter of the wider housing market over the next two years. With an estimated value of over £1 trillion, the Buy-to-Let sector is one of the key investment markets for the UK and continues to attract incredible demand to the point where residential undersupply is occurring up and down the country.
So what defines a ‘top UK city for property investment?’ We look at the locations that are attracting inward investment for regeneration, generating property price growth and delivering above average rental yields.
2019 Population: 1.2 million
Property Price Growth since 2014: 19.30%
Birmingham continues to be one of, if not the most investment popular location in the UK, topping our list for 2020. Despite predictions that Birmingham would face the brunt of Brexit uncertainty, the city has actually been the top performer in the UK since 2016 and doesn’t look set to stop.
2019 for Birmingham has been a year of reinforcing the foundations that were established last year, making huge progress on generational developments while expanding an exciting pipeline. The ‘second city’ continues to experience incredible demand and it’s expected that as the city’s economy expands, rapid population growth means Birmingham will need nearly 100,000 new households within a decade. With Knight Frank forecasting price rises of 12.5% by 2022, it’s easy to see why Birmingham is showing so much potential as an investment location.
Birmingham rental yields for 2019 have sat anywhere between 4.4% and 5.3% according to PropertyData, with the market largely made-up of 1-bed and 2-bed apartments in the city centre. Demand is huge for properties near amenities in the city and for investors, there’s clear evidence to show that Birmingham has the potential to deliver exceptional returns on top of growth.
With construction for the Commonwealth Games 2022 Village started in 2019, we are expecting further development to take place in 2020 as preparations are made to host the prestigious event. 2020 will also see the infrastructure implemented to harness 5G technology, as the West Midlands begins testing new innovations.
2019 Population: 494,000
Property Price Growth since 2014: 12.45%
While price growth has slowed during 2019 after an outstanding Q4 of 2018, Liverpool remains a top investment destination in the North thanks to exciting developments, exceptional career opportunities and rising tenant demand throughout the region. JLL expects that property prices in central Liverpool’s will rise by 2% and rents by 3.5% throughout 2020, effectively ‘defying the gloom’ affecting other aspects of the UK property market.
Regeneration is having a huge impact on demand for the Liverpool rental market. After the completion of Liverpool ONE, the largest open-air shopping centre in the UK, Liverpool Waters has moved to the forefront. A £5.5 billion redevelopment of Liverpool’s waterfront, the project will create new residential, commercial and cultural spaces ready for residents to enjoy, completely transforming one of the most iconic areas in the city.
According to the council’s ‘Liverpool Local Plan’, nearly £14 billion worth of regeneration projects are either in progress or in the pipeline, with the eventual aim of creating 35,000 new homes and 38,000 new jobs.
According to PropertyData, Liverpool is one of the highest-performing Buy-to-Let hotspots in the UK – the postcodes L7 and L1 are regularly achieving yields of 8.2% and 8%, with rises of 15% and 12% in the last five years respectively.
2019 Population: 546,000
Property Price Growth since 2014: 22.09%
Manchester is one of the most exciting places to live and work in the UK, attracting young professionals that want excellent career opportunities alongside families that are looking for affordability. With a skyline that has been transformed by investment, Manchester seems to be experiencing the same ‘ripple effect’ that affected London in the last decade.
After 2009, London was one of the first markets to recover and saw growth spread out from centre. It’s expected that the same will happen to Greater Manchester, as the momentum of the city pushes growth out to areas such as Stockport, Bolton and Salford.
It helps that one of the major benefactors of investment is Manchester’s infrastructure. From the Manchester Metrolink to HS2 plans – the Transport for Greater Manchester project is ensuring an efficient, modern transport system around the region.
For Buy-to-Let investment, Manchester seems like one of the ‘safest’ bets in the UK. As a recognisable location with plenty of history, the second-fastest growing city in the country (with 15% growth, just behind Birmingham) is experiencing incredible price rises that are putting it firmly at the top of investor wishlists.
2019 Population: 417,000
Property Price Growth since 2014: 23.92%
Another major destination within the Midlands, Leicester is one of the cities suffering from chronic supply and demand issues. This has created an incredibly competitive market and ensured excellent growth over the last 12 months, making Leicester a key player in the Buy-to-Let sector.
Looking at past performance, Leicester’s growth forecast looks positive. With growth of 250% since 2000, 7.7% in the last year (#1 in the Hometrack price index) and 2.4% in the last three months (#3 in the Hometrack price index), it’s continuing to push forward as people leave London for regional markets.
In terms of regeneration, Leicester Waterside is a project that is aiming to transform 150-acres of a largely run-down former industrial site at the heart of the city. The waterside regeneration is aiming to create new homes, new workspaces and bring new investment, with the outcome of creating 200 new homes, 140 jobs and nearly 2,000 m2 of commercial space.
2019 Population: 330,000
Property Price Growth since 2014: 19%
Nottingham, one of the surprisingly lesser thought-of investment areas, is similar to Birmingham in location in that it is a very central location in the UK with direct access to many key destinations.
Nottingham is one of the surprisingly lesser thought-of investment areas, despite the similarities it has with Birmingham. With a very central location in the UK and direct access to many key destinations, Nottingham city centre is also well-known for its array of amenities from the retail offerings of the city-centre and Market Square to the restaurants and bars a little further out in Hockley.
The Nottingham infrastructure is incredibly well-developed and offers opportunities in and around the city-centre. The metro system, for example, is extensive and connects many of the different networks around the city.
The market is relatively affordable and sees incredible demand from both professionals and students, providing particularly strong rental yields. Growth is largely maintained around the city-centre, where prices have risen by around 210% since 2000.
Regeneration is also delivering a range of new amenities for Nottingham residents. The redevelopment of intu Broadmarsh and the surrounding area has created a new retail destination for the city, serving the rising demand we’re witnessing.
2019 Population: 725,062
Property Price Growth since 2014: 19.5%
Out of all the cities on this list, Sheffield is the earliest within the property cycle. Prices are still some of the lowest out of all major cities in the UK and despite a dramatic transformation of the city-centre, it’s unlikely there will be huge shifts in prices until 2020.
Sheffield offers the opportunity to secure excellent prices within the current market, essentially ‘locking-in’ stronger yields if forecasted growth actually occurs. With £480 million spent on regenerating Sheffield’s shopping district (including The Moor Shopping Centre), Sheffield’s local authority are directly looking to target demand with incredible amenities.
This future Buy-to-Let investment hotspot has seen prices grow by 223% over the last 20-years and still remains one of the most affordable markets with the average property costing £199,000. While Sheffield might be still a few years behind some of its Northern counterparts, it has a bright future ahead if the market continues on the same path.
2019 Population: 165,000
Property Price Growth since 2014: 11%
A city that is often under-recognised within the property investment industry, Oxford anchors one of the strongest economies in the country – delivering an output of £21.9 billion through the dedication of 434,000 working professionals.
The city ranks 3rd in the UK for property price growth over the last 10-years, with figures peaking at 55% higher than they were a decade ago. Though price growth may have slowed since 2016, Oxford still draws a vast amount of investment interest boosted by exceptional employment opportunities and a world-famous education sector.
Connectivity in the region is vital and Oxford either has (or is planning) direct links with London, Cambridge and Heathrow. Between East-West Rail and Crossrail, Oxford will benefit from the infrastructure improvements sweeping through the London Commuter Belt. This has helped push Oxford’s employment rate to less than 1%, increasing foreign direct investment (FDI) by 122% when compared to 2018’s figures.
2019 Population: 474,000
Property Price Growth since 2014: 14%
The world’s closest capital city to London, Cardiff is primed for investment – one of the fastest growing cities in the UK and home to some of the largest events on the globe. Recent regeneration has helped a number of clusters emerge particularly in the financial, creative, life science and manufacturing sectors.
Cardiff’s infrastructure has also benefited heavily from regeneration. The new South Wales Metro is helping deliver more frequent, reliable and faster trains with almost 100 stations across the network. As part of the network, Central Square will be a key example of this regeneration and support around 30,000 jobs.
With Cardiff’s GVA growing faster than any other core UK city at 5.7%, it’s projected to be the fastest-growing core city for the next 20 years, making it firmly one of the top UK cities to watch in 2020.
2019 Population: 815,000
Property Price Growth since 2014: 17.04%
With the fastest-growing population of any UK city outside of Manchester, the popular myth that Leeds has an abundance of residential property is actually the opposite. The Leeds population is growing seven times faster than London’s, meaning there’s actually a severe undersupply. With nearly £7 billion of development in the pipeline, demand is huge for one of the largest economic centres outside of London.
Redevelopment is a key driver for Leeds and the regeneration of the South Bank area will be one of the most significant transformations the city has seen in 100 years. South Bank will aim to double the size of Leeds city centre, delivering a space equivalent to 350 football pitches in size that will provide over 35,000 jobs and 8,000 homes. As one of the largest city-centre initiatives in Europe, it will capture the growth of Leeds city-centre for the coming decades.
With property prices rising by 211% since 2000, Leeds is a key destination within the Northern powerhouse and one of the best places to invest in property UK 2020.
2019 Population: 9,100,000
Property Price Growth since 2014: 13.61%
After 2009 London saw the fastest-growth in the UK, hitting peaks of around 70%, three-times faster than the wider UK. Prices in the capital skyrocketed during a rise that has now reached tipping point. Since 2016, London has levelled out, driven by affordability issues and a constricted market.
Brexit has played a huge part in the ‘London slowdown’, although forecasts all seem to agree that once a deal has been reached, London will start to grow once more. As one of the major financial destinations in the world, it’s nigh-on impossible for London to experience prolonged declines.
What we can expect is that once uncertainty clears, foreign investment will once again flow into the capital, driving prices back up in more affordable areas. Looking at the wider market, prices have only fell by around 1.5% in the ‘cheapest’ 11 boroughs while the 11 most expensive boroughs have seen decreases of 7%.
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