London Street.jpg — Where should you consider buying UK property in 2021?

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With the current pandemic that we all find ourselves in, it begs the question of whether it is really going to have the effect and impact on the property market, as some may have predicted. Working from home has truly become a phenomenon and this also may affect the way in which we live, and more specifically where we live. Will Brexit impact where companies conduct their business? As suspected, 2021 is an unusual year for most, and this could very well continue to cause some expected, but mostly, unexpected surprises for the property market.

Is there still a need for city living?

Living in the city centre used to be a no-brainer, as it was so much faster and easier for work travel. As the popularity of working from home continues to rise, the demand for city centre apartments is dropping significantly. According to Biz News, a survey was carried out mid-2020 which revealed a record number of Londoners who considered moving out of the city, with residence across the home counties proving more popular. As it is, apartments in the city centre often command high rental amounts, so it would make sense for workers, who are working from home, to choose a premises with a lesser rental amount. Not only are city apartments more expensive, but they often cannot compare to the spacious living areas and outdoor space that suburban areas offer, which in essence is a rare commodity in London. According to the survey, one in three buyers want to escape London, but still remain close to the capital in case they need to travel to their work offices on occasion. Moving just outside the city is ideal because prices are much lower, but still offer good transport links into London.

According to the Hamptons International Housing Market, London is expected to experience the second largest fall in house prices in the UK at -1%. A poll conducted by the Royal Institute of Chartered Surveyors echoed this, with many surveyors expecting property prices in London to fall over the next three months, suggesting that many inner-city flats are lying empty and unable to be sold.

How is technology affecting house prices?

A growing employment sector in the UK is technology, and it has proven particularly resilient to the challenges faced by many other industries during the Coronavirus pandemic. Throughout the summer months of 2020 when much of the UK was still in lockdown, the number of roles advertised within the digital sector increased by 36%. The popularity of online shopping, especially during lockdown, has contributed significantly to the strong performance of the sector.

Luton

Luton’s property market has performed very well despite the Coronavirus pandemic, with prices rising by 3% over the last twelve months to October 2020 according to Plumpot.

This is a great town for investors looking for capital growth, as property prices have risen by 30% over the last five years. Furthermore, it has been acknowledged as the best first-time buyer hotspot because of its fair pricing and excellent transport links.

Medway

It is made up of five main towns; Strood, Rochester, Gillingham, Chatham and Rainham, and has a combined population of 278,016. The Medway towns are situated on the River Medway, and due to their locations, enjoy a long naval and military history.

Not only this, but these towns also offer peaceful waterside views, and a slightly slower pace of life, all while being just a stone’s throw away from the city centre. Trains into London will take you just over thirty minutes, making these areas extremely popular for those who work in London, but prefer the reduced prices of property here. According to research, demand for property in the Medway towns has increased from 29% to 40%. Property prices in Medway have also outstripped London by 16% between March 2016 and March 2020. Investors looking for good levels of capital growth should definitely look at opportunities in Medway, especially with the regeneration that this area is under currently.

View our latest offers in this area here.

Leeds

As one of the first UK locations to benefit from the Vodafone and CityFibre fibre-to-the-premises programmes, many technology companies are setting up their companies in Leeds.

As one of the fastest-growing tech hubs in the North, it contributes £6.5 billion to the city regions’ economy. Leeds also has a strong job market in general, and employment is expected to rise by 25,000 over the next 10 years. This is quite a bit higher than other employment centres outside of London and is currently the same as Birmingham. Leeds has also seen the highest rate of growth at 6.1%, which is well above London’s 4.4%.

Londoners moving to Leeds has risen by 58% over the last five years, due to the fantastic job opportunities and booming cultural scene. With this strong economic performance in mind, sales prices are expected to increase by 13.7% and rental prices by 14.2%. Leeds experienced the third highest house price growth of 4.9% over the last year, and if this alone is not a great reason to invest, what is?

Reading

Those employed in the tech sector in Reading also enjoy the highest average salary outside of London. With a population of well-paid workers and modest house prices compared to London, it is no wonder investors in this area can fetch good rental yields, standing at an average of 4.5% according to research.

Doncaster

It is situated between London and Edinburgh, connects to the A1 and M18 road network, and has its own airport and private rail network called iPort. As the online shopping trend continues to grow, more companies are setting up centres in the South Yorkshire region.

Work is already underway to deliver more warehouse space. A retail giant has announced plans to build an 800,000 sq. ft distribution centre near Doncaster which is expected to create over 1000 new jobs. People who move to the area for work will need accommodation, and the housing sector in Yorkshire is already under pressure. According to research by the National Housing Federation, the Yorkshire and Humber region needs to build 18,000 new homes per year to keep up with the demand, which it is currently not doing. This has caused house prices to increase, and in 2020 Doncaster recorded the second highest house price growth in Yorkshire at 8.8%.

Brexit winners and losers

It has been predicted that the London property market will suffer, partly because of the uncertainty surrounding Brexit and partly because the Coronavirus pandemic has sparked people to reassess their work/life balance. Its further been predicted that house prices in the capital will rise by 12.7% between 2020 and 2024, which is well below the national average of 20.4%.

Commuter towns are benefitting greatly from London’s exodus, in terms of both population and house price growth. Investors can still buy property on a modest budget, but the long-term fundamentals look good for continued growth.

In contrast, house prices in Edinburgh are forecast to increase higher than the national average, climbing by 16.5% by 2023 alone. Both price and rental growth is forecast at 3.1% per annum, well above the national average of 2.2% price growth and 2.4% rental growth. Edinburgh offers the ideal fundamentals for property investors, as a young population coupled with a booming employment sector (especially digital) and a better work/life balance compared to many of the cities in England. Scotland is also underdelivering on house building, so demand is going up but there are not enough houses to satisfy it, thus leading to growth.

Shared housing investments are also fantastic for investors wanting to achieve good rental yields. However, many can often be dissuaded due to the amount of work that goes into managing one. Shared housing is known as HMOs in the UK and must comply with strict regulations, such as ensuring that the property has working fire alarms, PAT testing on electrical appliances, fire escape signage and licensing. Also, investors must deal with tenants, whether it is to issue contracts, protect deposits or deal with any issues that arise.

If this is a concern, there are other options such as getting yourself a management company to handle this for you. Speak with someone a Metric Investments to discuss how we can assist you in finding the perfect property or to assist you with your property management requirements.

In conclusion, if you are looking at investing in UK property, it may be worth looking outside of London for the most resilient markets. The effects of Brexit and the Coronavirus are expected to hit London hardest. This is partly due to people moving to surrounding towns for more space and a better work/life balance, and partly due to uncertainty which tends to affect London’s prime central property market where people are less willing to invest a large amount.

Should you feel that this is something worth exploring, contact Metric Investments for possible opportunities in these areas and more.