Property investment has already seen some ups and downs this year; with the uncertainty and delay surrounding Brexit, new regulations for landlords and buy-to-let investors, and a shift in the demand for the types of accommodation renters are looking for (particularly young professionals and students). Already at the half way point through the year, we've noticed some interesting trends forming at the start of the year, which could impact you if you're looking to invest in 2019.
Regional prices are balancing out
House prices in the UK have long seen a big disparity between the north and the south, however in 2019 this has slowly been levelling itself out with average property prices in the north growing exponentially faster than those in the south.
Across the UK, house prices in the North West are predicted to grow 21.6%, 20.5% in Yorkshire and The Humber, and 17.6% in the North East between 2019 and 2023. Whereas, in the south, prices are predicted to rise by a much smaller 4.5% in London, and 9.3% in the South East.
Investors are looking beyond London
With house price rises playing a major role in this, investors are now more inclined to look outside the capital for great yields and capital gains from their properties. "The importance of regional cities such as Manchester cannot be overstated" (What Investment) as buyers are now enjoying yields of up to 9% + in these northern powerhouses.
Currently northern cities such as Manchester, Liverpool and Newcastle are dominating the highest yields, with ten of the top 25 postcodes in these locations. Currently in Liverpool, investors can benefit from yields of up to 9.7%, 8.89% in Newcastle, and 7.07% in Manchester.
"Knowing regional markets inside and out was more essential than ever for property investment companies looking to maximise their clients' returns in 2018 - and will continue to be the case in 2019" - Jonathan Stephens.
Consumer confident is growing
Uncertainty surrounding Brexit and new legislation surrounding landlords and buy-to-let investors has seen house prices across the country be dictated by the confidence of the buyers, as opposed to affordability.
"According to Q1's Halifax Housing Market Confidence Tracker measured by Ipsos MORI, consumer confidence in the outlook for the housing market bounced back to a net balance of +64 in March , from +60 in February. Concerning just how confident consumers are in the outlook for the housing market over the next 12 months, 33% said they expect the average property price to have increased by up to 5%, and 25% predicted growth between 5% and 10%" - Keystone.
Local authorities have more control over planning reforms
Plans to standardise the calculation of housing delivery targets and measures to give responsibility to local authorities for the housing built in their areas could see an increase in the number of planning applications that are approved, and therefore see less disparity between the supply and demand for certain types of properties.
Reforms include: requirements for councils to publish projections for future housing demand and review every five years, focusing on high-rise and city centre developments, and greater collaboration between neighbouring local planning authorities.
Build-to-rent will see a big boost throughout 2019
Between 2017 and 2018, the output of build-to-rent (BTR) properties skyrocketed by 49%, with 10,000 new units predicted to be completed by 2020. With an incredibly high demand in many UK cities for high-specification rental accommodation, and the increased encouragement from local authorities, more BTR developments are popping up every month.
It's currently estimated that over 20% of UK residents live in privately rented accommodation, and that number is only predicted to grow in the next 15 to 20 years to see more people renting than owning their homes across the country.
Large sites will see a more diverse mix of accommodation types
"The Letwin Review advised that greater diversity was needed to meet demand in areas of high housing need" (Keystone). This includes diversity in the size, type and tenure of housing on a site. Sites with over 1,500 units may have to strongly consider the purpose of their units, as well as their size and type more carefully to accommodate more BTR and affordable homes.