North Vs South – Where to Invest

As the UK housing market continues to boom, the divide between Northern and Southern property performance is becoming more distinct than ever. 

In recent years, the property market in the North has performed incredibly strongly and has remained resilient throughout the COVID-19 pandemic. 

With the perfect pairing of high rental yields and excellent potential for capital appreciation, the North seems to be leading the way when it comes to finding the ideal property investment.

House Prices 

The January House Price Index from HM Land Registry recording that the average annual house price had increased by 7.5% year on year for January. However, when we start to look closer at the variances across the North and South, there are clear divides regarding house price growth. 

Across all regions, the North West outperforms every other area with a 12% rise. Other areas showed house price growth of: 

  • Wales 9.6%
  • Yorkshire and the Humber – 8.9%
  • North East – 8.5%
  • South East 6.4% 
  • South West 6.7%
  • London 5.3%

According to Zoopla’s House Price Index in February, two UK cities are leading this growth. 

Manchester comes out top of the list with a 6.6% year on year house price increase, followed closely by Liverpool with a 6.4% rise. 

The data follows numerous surveys, reports, and even anecdotal evidence that people are moving out of London and built-up urban areas after working from home has started to become a more permanent fixture of our working lives. 

Despite strong growth – the North of the UK still offers desirable prices when compared to London and the South of England. According to the UK house price index, average house prices in November 2020 across regions were: 

  • London £513,997
  • North East £140,248
  • North West £180,280
  • South East £342,771
  • South West £278,391

For investors, this provides the perfect conditions of comparatively low entry pricing with scope for growth and higher rental yields. 

Rental Yields – North Vs South

The private rented sector has undergone much change in recent years, particularly when it comes to taxation. Analysis undertaken by Hamptons International has found that investors are increasingly turning to the North where higher rental yields can be found. 

The average yield on properties sold by investors in 2020 was 5.2%, according to Hamptons. But landlords were buying properties with average yields of 6.2%. Overall, 55% of landlord purchases achieved yields of more than 5% – compared with just 35% of sellers.

In London, landlords ditched properties with yields of 4.2%. Meanwhile, the average investor buying in the North East purchased property with a 9% yield.

Research was undertaken by Fleet Mortgages, a buy to let specialist lenders again revealed the North in for rental yields. Comparing Q4 2020 and Q1 2021, the North East of England posted the highest rental yield figures hitting 9.1%, with the North West taking third spot at 7.8%.

While to protect any portfolio, we would always recommend that you secure a diverse range of properties when it comes to the UK – it’s clear to see that the “North Powerhouse” powers on.

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