Liverpool: the number one spot for UK residential investment

Updated: Aug 13, 2018

With investors looking to the north rather than London for their investments, it's no surprise that more and more investors are turning to Liverpool - the leading power in the UK's Northern Powerhouse region. In recent years, Liverpool has become the number one hotspot for property development and investment in the UK, overtaking former giants such as Birmingham, Manchester and London. It's no surprise with Liverpool postcodes dominating the top areas for rental yield return.

L7 is at the top of the list with a huge average yield of 12.63% (Buy Association) which covers Edge Hill, Fairfield, Kensington and City Centre Liverpool. Four other Liverpool postcodes are in the top 25 areas for average rental yield including: L6 (10.57%), L15 (10.29%), L1 (8.61%) and L3 (8.47%), dominating the list with the highest number of postcodes listed (Buy Association).

The north of England in general is outperforming the south in the buy-to-let market; there has been a steady increase in investment in cities like London and the home counties, however this cannot compete with the rate of growth and yield opportunities in the north - particularly in the north west. With Brexit less than a year away and strategies in residential property investment adapting to this, a shift in focus has happened seeing investment move from the Capital further north to cities such as Liverpool. In a recent report, Property Forum noted that there has been a "significant growth in the economies of Liverpool, Manchester, Leeds and Birmingham, which attracts not only businesses to the region but increased demand for residential property"; a demand which allows for investors to take advantage of a high rental yield and the potential for long-term capital appreciation.

Graham Davidson, managing director of Sequre Property Investment, commented that Manchester has topped the list of the highest annual growth rate with 7.4%, however "has now been joined at the top of the list by its near neighbour Liverpool at 7.2%. This is certainly no surprise considering the hive of activity that's ongoing in these great cities. Liverpool's growth of 7.2% is up from just over 2% this time last year. Deals here are flourishing due to the demand and because returns are incredibly healthy. For anyone considering investing in [Liverpool], now is the time to do it" (Property Reporter).

House prices in Liverpool are also an attractive feature for investors with the average price in the region just £140,160 (Rightmove), much lower than the UK national average. Rental demand is also incredibly high in Liverpool, with a growing young professional and student population (the city has three of the UK's top universities, including Russell Group university, University of Liverpool).

Plus, it's not just residential property that investors could benefit from by looking to the north. The market for other types of accommodation includes hotels and student apartments are growing in popularity. In 2017, the UK saw over 15,000 hotel rooms developed - a growth of 2% on the previous year, and in 2018 this number is expected to grow by a further 3.3% (21,000 hotel rooms). The Knight Frank Development Index also named Liverpool as one of the cities to watch for hotel investment in the coming year alongside Inverness, Brighton, Edinburgh and Cardiff.

Liverpool is quickly putting itself on the map as a stand-out hotspot for property investments particularly in the student market. There are a number of reasons for this including: three top universities and a large student population looking to rent; a growing number of young couples and graduates looking to rent; affordable house prices for investors; and excellent rental yield (ABC Money). The University of Liverpool (a Russell Group university) alone is ranked in the top 1% of higher education providers globally, whilst the cities two other universities - Liverpool John Moores University and Liverpool Hope University - are also ranked within the top 75 UK universities (The Complete University Guide).

"City living has gained strong momentum in Manchester, Liverpool and Leeds over the past three years and, together with an active student market, has pushed demand in both the sales and lettings markets notably higher" (JLL).

Regeneration is also an attractive feature bringing investors and developers alike to Liverpool; the city is currently undergoing a £14 billion regeneration which is seeing the redevelopment of the iconic Liverpool waterfront, new creative and knowledge quarters, Everton FC's new stadium, a new cruise terminal, a new TV and Film hub, £250 million of road infrastructure, 2 million sq ft of office space and 10,000 new homes (Regenerating Liverpool).

"Liverpool is a city defined by its eccentric culture across the UK and all over the globe. Residents and visitors flock to the abandoned warehouse nightlife of the Baltic Triangle, the galleries and museums of the Albert Dock, and the unconventional cafes of RopeWalk's famous Bold Street" (ABC Money).

Liverpool also offers great opportunities for developers. Sale prices on developments are predicted to rise between 2018 and 2023, with an average price growth of 3.6% per year in the city, outperforming the national average by a significant amount. This follows on from the 5.1% surge seen in Liverpool sale prices in 2017 (Buy Association).

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