The conventional wisdom you’ve been hearing for seemingly countless years runs something like this: if you want the best returns on your property investment, you simply have to focus your attention on London. It’s difficult to ignore the fact that property prices in the capital have been soaring. But this isn’t the whole picture. The reasons for relocating to properties in cities outside London are multiplying – fast.
Several studies released in 2015 suggest that London’s property market is overheating, while another phenomenon is gathering momentum vigorously: as London property prices go stratospheric, they’re becoming unattainable for growing numbers of people, who are now looking elsewhere to build their careers and purchase their homes. A number of smaller cities are building new homes and renovating older properties as never before.
The latest annual “Cities Outlook” report from the Centre for Cities, for example, found that population growth (a key indicator for economic growth) in cities in the South grew at twice the rate of other cities during the decade to 2013. Even in places like Swindon, where the local economy is readjusting after the closure of big employers such as Woolworths, the number of people pouring in to buy houses has grown substantially. Basically, it’s viewed as a pleasant place to live by many (property prices there are very affordable) and it’s well within commuting distance of Winchester and other employment centres in Wiltshire.
The recent devolution to Greater Manchester allowed the city to tailor its policies toward growth and property development in an impressively successful way, leading Centre for Cities senior economist, Paul Swinney, to urge the Government to extend devolution to other places too. This property boom is also allowing up and coming figures in the property sector to shine. Harry Dhaliwal, for example, has built up a successful career as a manager of three Belvoir letting franchises across Manchester city centre.
Meanwhile, a recent joint study by the Urban Land Institute and PwC (“Emerging Trends in Real Estate”) published earlier this year uncovered the surprise finding that Birmingham has the best property investment potential in the UK, as rated by 250 investors. The city saw population grow by 300,000 over the last decade (with under-25s making up 40%) and is home to 33,000 businesses – the biggest concentration outside the capital itself. The report underlines a strongly emerging trend: cities like Birmingham, Manchester, Bristol and Leeds (and elsewhere) are all benefitting from investor concerns that London has overheated.
To cap it all, a recent UK Cities House Price Index from Hometrack found that, for the first time since 2005, house prices in some of London’s most expensive boroughs were outperformed by cities elsewhere in the UK, with the largest growth rates being seen in Glasgow (7.6%) and Manchester (6.8%).
Similarly, in cities such as Lincoln, property development is expanding at a rate of knots. Recent figures from top estate agents reveal huge demand for properties within the city: between June 2015 and June 2015, demand skyrocketed by 22%, resulting in an extraordinarily buoyant property market. Mirroring the rapid growth in cities across the UK, new homes urgently need to be built.
In a nutshell, huge numbers of people are looking beyond the capital for homes and jobs as property prices in London become unattainable. The knock-on effect is that smaller cities across the UK are taking up the challenge and expanding both their populations and their property markets.