Recent years has seen more and more landlords begin to feel the squeeze, with the removal of mortgage interest relief and extra stamp duty forcing some to consider their place within the buy-to-let market. And that’s before you even consider the likely increase in lettings fees.
While this may seem like a sorry state of affairs for investors, the reality is that the market is still strong, with plenty of great opportunities to be had if you look in the right places.
In this article, we’re going to explore why one of those “right places” is Liverpool and why the city is proving so popular with savvy investors.
One of the clearest indicators of a city with good investment opportunities is strong economic growth. After all, a strong economy means more jobs, a growing population, greater demand for property and, ultimately, a better investment.
Liverpool has the fastest growing economy of any non-capital UK city according to data from Centre for Cities. Specifically, between 1998 and 2016, the Liverpool economy grew by a factor of 2.1.
Fast forward to 2018 and Liverpool’s core economy is valued at a cool £29.5 billion, made up of 252,000 businesses and has access to seven million customers.
Plus, the 2008 European Capital of Culture’s economy does not look like it’s going to slow down any time soon. Projections show a steady rate of growth in the coming years and make the city one of the best investment areas in the UK.
One of the major impacts on Liverpool’s property market has been the Northern Powerhouse proposal.
As one of the core cities targeted under the proposal, a £14 billion project to regenerate the area is underway. The expected result of this is 10,000 new homes, a new stadium for Everton Football Club, £250m of road infrastructure and two million square feet of commercial office space.
Alongside this, 38,000 jobs and 33,000 new homes are expected to be created under the Liverpool Local Plan by 2033. This will take Liverpool’s population to more than half a million.
Liverpool is home to three major universities and around 50,000 students. That makes the city one of the best with regards to investing in property to cater to the student market, with a 208% increase in student numbers between 2001 and 2011.
The true impact of students though is after they graduate. The regeneration of the city has resulted in Liverpool becoming much loved by its student inhabitants, many of whom go on to live and work in the city.
It is not just students making an impact either. Liverpool has, in general, a young population, with a third of the workforce currently aged between 16 and 19, and a fifth in their 20s.
This growing population of young professionals provides a talent future workforce, ready to take part in, support, and drive the ongoing economic growth of the city.
In the 21st century, the investment success of cities is heavily influenced by their connectivity. Gone are the days of families living on the same street for generations.
People now expect to have easy access to the professional and personal bustle of city centres without having the stomach the higher house prices. For that reason, comprehensive transport links are having a greater impact on buy-to-let investments.
Liverpool has 10 major motorways just 10 minutes away and local airports that fly to more than 200 global destinations (and influence the city’s strong tourist trade).
Meanwhile, Manchester is just a short train ride away, while the metropolitan area is home to over 2 million people, many of whom use convenient transport links to regularly access the city.
The combination of all the benefits laid out in this blog leads us to the fundamental reason you should consider Liverpool as your next investment area; the strength of its housing market.
In December 2018, Zoopla reported that housing prices in Liverpool had increased by over 22% in the last five years. This comes as the city has grown in popularity as a destination for both business and leisure and is forecast to continue, as investment in new commercial property and the rejuvenation of the city centre takes place.
As more and more young people settle in the city, rents are forecast to increase by 17.6% by 2022, while property prices are expected to increase by a similar 19.3% during the same time
All this makes Liverpool an exciting investment prospect, but surely, the demand for investments must have led to high purchase prices?
Well, while there’s no doubt that more and more investors are buying in Liverpool, the housing market is slow to react. Properties typically cost 4.8 times the local annual salary and the average price of a home is just £118,000. Compare that to London’s £491,200 average price and you can begin to the value you can get from investing in Liverpool.
Look property prices another way and you’ll see that the average price of a city centre property is £135,061. This price is steadily rising at just over 5% a year but is still well below the high watermark for Liverpool city centre properties, which was an average £175,423 in 2008 – just before the financial crisis.
Finally, it isn’t just capital growth that is on offer to investors. Liverpool consistently has some of the best rental yields in the country. In fact, the city’s L7 postcode currently has the second-best yields in the UK at 9.79%.
So, it’s clear that Liverpool still has plenty of investment opportunities and the city’s market is far from reaching saturation point.
Like investment in any city though, there are good and bad areas, which is why it’s always worth getting free advice on your investment options.
If you’re still curious about which other cities provide great investment opportunities, check out our blog on that very subject.