The number of homeowners from London buying properties outside the capital has increased, according to new research from Hamptons International.
Just over 30,000 of Londoners looking to buy a new property left the capital in the first half of 2018, some 16% more than H1 2017 and an increase of 61% over the last decade.
The majority of homeowners moving, around 38%, moved to the South East, a modest 3% fewer than the first half of 2017, followed by 30% moving to the East of England.
However, the number of movers leaving London and buying property in the North and Midlands has more than tripled in the last decade, with over a fifth (21%) moving to these regions compared to just 6% ten years earlier.
First-time buyers are also buying outside of London, with around 31% buying their first home beyond the capital. Whilst this is nearly double the number recorded five years ago, it is a 2% decline on last year’s figures, due to savings from stamp duty relief and the Help-to-Buy scheme.
Although the vast majority of first-time buyers, some 85%, moved to East of England or South East, Hamptons notes this is 10% fewer than four years ago. On the other hand, more than one in ten (12%) buying their first property in the North or Midlands, four times the number recorded in 2010.
“With affordability stretched, more Londoners are moving out of the capital to find their new home,” said Aneisha Beveridge, research analyst at Hamptons International.
“More people are making a bigger move and buying a larger home sooner to avoid having to pay stamp duty on additional moves as they trade up. But for many, this means heading further North.”
Beveridge goes on to note that despite more first-time buyers staying in the capital, “raising a deposit remains a hurdle for many, which helps explain why increasing numbers of first time buyers who leave London are heading North.”
The number of build-to-rent properties either completed, under construction or planned has risen significantly across the UK in the past year.
Analysis by Savills, commissioned by the British Property Federation (BPF), reveals there were 117,893 build-to-rent homes recorded across all the stages of development in Q1 2018; a 30% increase on Q1 2017.
Completions, as well as build-to-rent homes under construction, have grown substantially by 45% and 47% respectively, whilst properties in the planning stage have increased by 19%.
Of all the new build-to-rent homes either completed, under construction or planned, 60,530 (51%) are in London, followed by 29,600 in the North West (25%), and 13,009 across the Midlands and Yorkshire & the Humber (11%).
Ian Fletcher, the director of real estate policy at BPF, commented: “The build-to-rent sector is evolving quickly, with significant delivery in the regions and more houses, rather than just apartments, coming forward.
“Policy is also adapting, as to date the sector has grown without a planning blueprint. This is now changing. With the draft revised National Planning Policy Framework, local authorities will now have to specifically identify how many new rental homes their respective areas need.”
Meanwhile, Housing Minister Dominc Raab said: “The 45% increase in completed build-to-rent homes is good news, but we’re restless to do more.
“Our revised National Planning Policy Framework is a crucial next step in supporting the build-to-rent sector, reforming planning rules, and helping to deliver 300,000 homes a year by the mid-2020s.”
Households outside London spend an average of just over half their income on renting…
Households renting in London are putting a significant percentage of their income towards rent compared to the rest of the country, according to new data from Landbay.
Annual rental growth in the UK, excluding London, rose to 1.21% in March, bringing the average monthly rent to outside the capital.
In London, the average monthly cost of renting is more than double the national average, at 2100
However, the average disposable income for a worker in the capital is per 2455 month. As a result, 89% of their take-home pay is used on renting.
Outside the capital, rental payments amount to just over half (52%) of the average disposable income, which is per 1760 month.
In England, renters in the North East have the lowest percentage (41%) of their incomes going towards rent, followed by Yorkshire & the Humber (43%), the North West (44%) and the East Midlands (44%).
“Rents have continued to rise over the last five years, increasing by 9% across the UK since March 2013 and by 7% in London,” notes John Goodall, CEO and founder of Landbay.
“Not a day goes by when there isn’t more news about the supply-demand mismatch in the UK housing sector and until this is resolved, tenants will continue to rely on the private rented sector to support them.
“With the right property and the right location, there are attractive yields to be had, and consistent rental demand will drive returns in the long-term,” Goodall concludes.
Strong demand for city-centre living, a huge student population and urban regeneration make Manchester one of the best-performing property markets in Britain
Manchester, benefitting from the recent £1bn investment as part of the Government’s Northern Powerhouse initiative, is showing itself to be a vibrant, forward-thinking metropolis with the most attractive city centre investment market in Britain, according to JLL.
The property specialist company rates Manchester as its No 1 prospect for residential price growth over the next five years, with the annual average growth of 4.2pc compared with 2.4pc across the UK. Rents are expected to increase by around 3.5pc per annum between now and 2020.
Pivotal to the recent success of Manchester is a revival in demand for city-centre living
House prices grew by 10pc in 2017, with the average two-bedroom flat now costing £250,000 (an increase of 8.7pc over 2017), and rental prices rose by 3pc, according to JLL’s latest research.
Pivotal to Manchester’s success is a revival in demand for city-centre living – a trend that was at its height before the 2008 recession, which collapsed along with house prices due to sheer oversupply.
In 2000 there were 10,000 people living in the heart of the city. Now there are nearly 70,000, many of them students or young professionals with a desire to live close to where they work and play.
“City living has gained strong momentum in Manchester over the past three years and, together with an active student market, has pushed demand in both the sales and lettings markets noticeably higher,” says Neil Chegwidden, of JLL residential research.
“And with housing supply in the city centre severely constrained, prices and rents have soared.”
For investors with an eye on Manchester, its student population of more than 85,000, spread among four universities, plays a crucial role.
The city has the highest retention rate of students after London, with 50pc choosing to stay after they graduate. Six in 10 Manchester-born students who go to university elsewhere also return to their home town after graduation.
Nick Whitten, JLL’s director of UK research, says: “You can see the reasons. They already know they enjoy living there and there are plentiful employment opportunities and affordable housing.
“More new businesses are coming to the city than anywhere else in the UK, outside London. Many of them are first-time investors in the city, which is a reflection of Manchester’s growing profile.”
Manchester: a market snapshot
Average house price growth in Manchester over next five years
Average cost of a two-bedroom flat in Manchester
How much the government has invested in the Northern Powerhouse initiative
Number of people now living in Manchester city centre
The young demographic is also a driving force in the number of rental properties in Manchester – which constitute two-thirds of the city centre’s housing stock. A fast-emerging trend is a build-to-rent market, which accounts for a large proportion of the 30 new residential developments currently being built.
“Professionally managed blocks of rental apartments with leisure facilities and concierge services are forcing private landlords to up their game, which is a positive thing.
“Shortly, we could see landlords offering similar white-label services such as local discounts and access to a network of handymen to stay competitive,” says Mr Whitten.
JLL identifies nine Manchester “sub-markets” that offer potential to investors, including the centrally located Northern Quarter, Piccadilly and Castlefields, with its urban canalside living. St John’s Deansgate has become a prime market, with sales there last year regularly exceeding £500 per square foot.
Across the River Irwell, suburban Salford is prominent on the radar of the millennial market seeking a lower-priced, higher-quality alternative to city-centre living.
Salford is also a key focus for buy-to-let investors, with Salford Quays now the UK’s second-biggest media hub, home to 80 media organisations.
“It has the benefits of being well connected to the city centre but better value in property terms. There are 7,500 homes in some phase of development in the Salford City Fringe, and Salford Quays attracts a professional audience, which makes it a good place to invest,” says Mr Whitten.
He thinks that another area to watch is Ancoats and New Islington, whose regeneration is largely funded by the owners of Manchester City Football Club.
As the momentum and investment continue in creating the Northern Powerhouse, Manchester is arguably the poster city and the greatest beneficiary so far, with a new arts centre, two new research institutes and improved transport infrastructure.
It has also seen the highest rate of job creation in the country, with the number of new jobs growing by 84pc between 1999 and 2015.
London commuter belt towns fall down the rankings as Northampton, Leicester and Birmingham surge
Three of the top five locations for buy-to-let property investments are in the Midlands, according to new research.
Northampton, Birmingham and Leicester were all cited as top postcodes for buy-to-let, with strong rental growth of 2.38%, 3.91% and 4.35% respectively, according to independent mortgage lender LendInvest.
Whilst the Midlands regions have been steadily rising up the rankings, the report highlights the South West region as an up-and-coming market, as strong rental growth and healthy market activity has boosted the profile of cities like Bristol, Swindow, Truro and Gloucester.
Conversely, London and the South East continue to underperform, as declining rents deters further investment in these regional markets.
Historically strong performing commuter towns like Dartford, Romford and St Albans have recent begun to slide down the LendInvest buy-to-let rankings, in some cases by as many as 58 places.
However, the report notes that demand for housing will continue to support future growth: “Political changes are increasingly underpinning this uncertainty in the market, however the need for housing around the UK prevails.
“As such, we can expect the rental market to grow, with investors prioritising yields and rental price growth as valuable metrics to consider when purchasing a property.”
Property investors from the G20’s wealthiest nations are continuing to flock to the UK in search of new assets, according to a new report.
Analysis of investor patterns for purchasers from countries within the G20, conducted by home construction investment platform Homegrown, revealed that favourable currency exchanges have provided 18 out of the 20 nations with significant discounts.
Investors from South Africa and Russia have seen the greatest benefit since the value of the pound declined after the UK’s decision to leave the European Union, with purchasers receiving an effective discount of 21%.
Property investors from Brazil enjoyed the third largest saving of any G20 country, an effective reduction in costs of 17%, despite exiting the nation’s longest recession less than 12 months ago.
Purchasers from the European Union have seen the cost of investing in the UK fall by 16% since last June, whilst buyers in India have saved 15% on their purchases.
According to Homegrown, property prices have continued to grow since the referendum, increasing by 6.23%. However, the depreciating value of sterling has allowed many nations to continue to see discounts despite increasing property prices.
Out of all of the G20 nations, only Turkey and Argentina have seen the cost of investing in the UK increase, with domestic political unrest and ongoing economic challenges cited as potential reasons by the report.
‘This just goes to show the incredible value that the UK property market still represents to armies of investors around the globe,’ said Anthony Rushworth, founder of Homegrown.
‘Demand for housing has shown no sign of abating in Britain while many still struggle to get on the housing ladder, so it’s vital the country addresses its chronic shortage of housing stock,’ Rushworth continued.
The demand for UK property from overseas investors is expected to continue in the months ahead, according to independent think tank, the Official Monetary and Financial Institutions Forum (OMFIF).