The research looked at 30 major towns and cities across England looking at current rates of house price growth and the average investment yield available, splitting them based on six defining factors - whether they were a new town, a university town, a historic town, a commuter belt hotspot, known as a manufacturing hub or as a hotspot for technology and media.
When it comes to the initial cost of investing, new towns are home to the highest current house price averaging £348,172, closely followed by historic towns with an average house price of £345,471. University towns are home to the third highest cost when investing at £334,486, while towns with a manufacturing focus rank as the most affordable at an average of £206,596.
Where capital gains are concerned, new towns also rank top, having seen a 14.1% increase in the last year alone. However, towns and cities with a strong focus on technology and media follow closely behind with house prices climbing by an average of 14% annually.
Commuter belt towns have seen the lowest level of capital gain in the last year, climbing by 11.3%, as the pandemic impact of working from home continues to take its toll.
However, when it comes to the best return on your investment, the lower cost of acquisition across manufacturing towns sees them come out on top despite them also offering up the lowest average rental values.
Manufacturing towns currently offer investors an average yield of 4%, while technology and media focused towns and cities also make for a smart place to invest your money, commanding an average yield of 3.8%.
University towns sit third with an average yield of 3.5%, while historic towns are home to the lowest return with an average yield of 3.2%.
Iain Crawford, CEO of Alliance Fund, commented: “There are a wealth of things to consider when investing into real estate and these factors fluctuate from one town to the next and also differ depending on what type of investment you are looking to make.
"While new towns are certainly subject to some of the highest levels of investment, the far higher price of acquiring a plot, or property, can mean a lower return in the long run.
"For the large part, investing in a town with a particular draw or purpose, such as an established or emerging industry, will always make for a smart investment. For example, we’ve seen how Manchester has established itself as the UK’s media hotspot and this has been incredibly beneficial for those who have invested in the city's residential and commercial property sectors.
"A strong foundation built on a more traditional industry such as manufacturing can also make for a good investment. However, these towns can be more susceptible to the boom and bust lifecycle, as we’ve seen time and time again when major car manufacturers, for example, decide to relocate their base of operations.
"University towns are generally a safe bet due to the sustained and ongoing need for accommodation from the student population and there is a severe need for more PBSA investment to meet this growing demand.
"Of course, any investment is susceptible to external factors beyond our control. Previously, commuter belt towns have performed extremely well, but the impact of the pandemic has severely stunted growth within these areas as the ability to work from home has reduced demand.”
