Liverpool: Location Report December 2018

Throughout 2018 Liverpool has slowly established itself as a hotspot for property investors to become part of a city offering excellent rental yields, capital gains, rental demand and culture. In recent years, Liverpool has slowly been climbing the tables to become one of the best cities to invest in in the UK; primarily due to its involvement in the Northern Powerhouse, connections to HS2, and competitive rental market. Liverpool's diverse range of regeneration projects and support from government funding also make it an attractive city to investors from all branches of property investment. It's also a hotspot for outside investment, with the city bringing in £1bn per year to fund a variety of projects.

Growth in the UK is causing concern for many different types of investors and anyone with savings in the bank. Interest rates have been rock-bottom for the past decade, and inflation is outpacing them massively. One of the only investment strategies standing the test of time seems to be property - with rental demand higher than ever and the potential capital gains on affordable opportunities growing. Many investors, however, have been put off investing in UK property with the lead up to Brexit, mainly from the falling popularity of London. However, by looking to the north, investors can still gain profitable opportunities.

A recent report from Rightmove noted that the average apartment in London now costs over £630,000 - a figure that has many investors unable to afford the city; however, prices in the north are dramatically lower, with some apartments being able to be purchased for under £100,000. Unsurprisingly, Liverpool is at the forefront of this shift to the north, with extensive regeneration projects changing the face of the city from a Capital of Culture to one of the most popular tourist, shopping and heritage destinations in the UK. The city now welcomes over 62 million visitors every year to experience the home of the Beatles, famous art galleries, and museums, bringing Liverpool's tourism economy to a worth of £4.3bn.

And it's not just tourists that have been drawn to the city - over 12,000 more people now call Liverpool their home compared to 2015. This increased number of residents - which include a mixture of graduates, young professionals and international workers - has caused a dramatic increase in the rental demand in the city. Not only has this seen an increase in the rental cost of living in Liverpool, but has also seen house prices increase across the area with Liverpool's property market now worth £1bn - more than double what it was in 2012.

The median price of a property in Liverpool is now just over £173,000; and the average cost of renting reaching £500 - £600 per month (Zoopla). This records at an 8% increase in property values over 2018 alone, "substantially outperforming the national average" (Benoit Property). This is great news for any investors looking for growth in potential rental yields and also for those looking for high capital gains - house prices in the area are expected to grow by 22.8% over the next five years.

While property investment in the UK is still a great opportunity for those who are able to buy with cash, those who are looking to invest with a mortgage may find it more difficult to secure a loan. According to Savills, lending for buy-to-let has decreased by 26% since last year. However, for those with the funds, Liverpool is one of the best locations to become a landlord - with a 70,000 strong student population and an ever-increasing number of young professionals moving to the area, rental properties are in high demand. According to TotallyMoney, three Liverpool postcodes have made the list for the top 10 most profitable locations to be a landlord in 2018 - L7, L6 and L1 (with average yields in these postcodes reaching between 9.36% and 11.79% gross).

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