London
The UK’s status as one of the world’s leading property investment markets remains firmly in place following the Conservative party’s recent election victory. After the usual pre-election lull, activity in London is picking up again, with investors buoyed by the certainty and continuity that the government will provide. Major regeneration and transport infrastructure projects, such as Crossrail, will continue to drive development across outer London, creating new pockets of value in places such as Woolwich and Ilford.
Greater London saw growth of 12% in the year to January 2015. Outer London’s growth potential in particular is reflected in projections for 2015-19 which put prime central uplift at 22.1% and outer boroughs at 25.8%13. Such forecasts remain supported by a structural undersupply of housing stock – a shortfall of some 21,000 homes every year – combined with ongoing population growth; inner London is expected to add 23,428 new households in 2015 while outer London adds 32,154.
Manchester
A new addition to our Investing category, Manchester’s investment case stands firmly on its thriving economy, cosmopolitan culture, rapidly growing population and significant residential undersupply.
Residents of the City of Manchester now number well over half a million having recorded growth of more than double the national average over the past decade and a half. The city centre has grown even faster, with the area’s population quadrupling over the last 20 years. At the centre of the government’s Northern Powerhouse vision, Manchester’s pioneering of the push for increased regional devolution across the UK has allowed for the emergence of strong leadership with the scope to deliver a Manchester-focused vision for the future.
Capital growth in Manchester steadied in 2014 following a spike the year before, increasing confidence that the market presents real long-term investment potential. Prices were up 5.4% in the 12 months to March 2015, while city centre apartment prices rose 6.3%18 over the same period. Despite this record of positive growth, city centre apartment prices remain 17.3% below peak, with the average City of Manchester home still valued at less than half the average seen in London. Prices are forecast to rise to close this gap, with new projections putting Manchester price growth at a strong 26.4% to 2019.
Edinburgh
Edinburgh remains a strong market with high potential, but an extreme lack of supply continues to make entry difficult.
The first few months of 2015 saw strong price growth, with average prices increasing 21.5% year-on-year, however this was also accompanied by weaker transaction growth. This temporary fluctuation of the market was due to April’s implementation of the Land and Buildings Transaction Tax.
Many buyers of properties priced below GBP330,000 are set to benefit financially so delayed their purchase until the new tax came into effect, while above this price threshold purchases have spiked to avoid the slight hike in fees. We expect the second half of 2015 to see the reverse – a higher volume of sales dominated by transactions below this price threshold.
This short term volatility in the market also preceded May’s UK General Election. Now that the uncertainty of election time is over, and with the Scottish National Party proving so popular, investors can expect renewed stability within the Edinburgh market which is underpinned by a historically buoyant economy. Continued high demand within the city’s private rental sector is expected to build on the 7.9% rise seen throughout 2014 and with house prices forecast to rise by another 25% in the four years to 2019, this is an excellent time for buy-to-let in the Scottish capital.
