It has long been said by onlookers and analysts that the London property market is overdue a correction. With affordability in the capital at an all-time low, demand has slumped significantly. This is driving both potential buyers and tenants away from London and into other UK cities.
In fact, the rate of London’s property price growth is currently at 7.6% – the lowest for three years. In stark contrast, this time last year prices were increasing at a rate of 11.8%. Institutions such as RICS (Royal Institute of Chartered Surveyors) and researchers such as Hometrack have become increasingly sceptical of the London property market and are instead hailing other regions and cities such as Manchester and Birmingham. The growing consensus is that London has lost a lot of momentum whilst the regions have been rapidly recovering and booming.
Historically, alternative cities such as Manchester and Birmingham have always delivered superior cashflow to investors, whilst London has provided the capital growth. Now we can see London’s capital growth prospects slowing, as those of regional cities flourish. Of course, this decline will not be indefinite and eventually the London market will pick up. However, when the market does recover it is likely to do so at a painfully slow/moderate pace, whilst the regional cities continue to enjoy steady and rapid growth.
One of the main reasons many would-be and current investors have for avoiding areas outside the capital is a lack of knowledge and the assumption that management would be complicated. At Nova Financial we can advise on every step of the process of investing in these regions. All of the due diligence is done for you. We tailor our recommendations to suit your specific situation and can also arrange the finance and management for the properties. If you feel as though your portfolio may benefit from some diversification or you are looking to invest, then don’t hesitate to get in touch!