Overall uncertainty may be prevalent across a wide range of investment sectors due to the current pandemic, however there have been many signs that the property market remains strong despite the challenges that COVID-19 has brought.
During the past year property prices have continued to rise and demand has remained strong. One example of this was in September 2020 when the Bank of England reported that the number of mortgage approvals was at the highest level since September 2007, highlighting that the property market continued to flourish despite the pandemic, including high demand from both lenders and buyers in regeneration hot spots.
During the latest restrictions being imposed in January 2021, the housing market in England is remaining open allowing people to continue the process of moving home, enabling investors to continue to seek properties and construction works to continue. In addition, although many of the professional services may be working remotely, relevant legal and financial advice can still be obtained.
Therefore, if you are planning to invest in property, the buoyant market conditions currently do not show any signs of slowing down. In addition to the current trends, the government infrastructure spending projects will also start to have a positive impact within the property market by creating demand for property within the regeneration hot spots.
Areas of investment
Over recent years there have been many announcements regarding government investments within a range of projects such as High-Speed Rail and Crossrail, as well as commitments upgrade roads including smart motorways.
In November 2020, the Chancellor Rishi Sunak announced further government spending on national infrastructure projects in an attempt to bolster the country’s economic recovery following the heavy impact of the coronavirus crisis. Projects over the next four years have been mapped out including; upgrading roads, railways, broadband infrastructure and a commitment to creating a net zero economy by 2050.
Establishing the locations in the country that will likely see the most benefit from the government’s investment projects can sometimes feel like a gamble when looking to invest into property however Howsy, a letting management company have undertaken research seeking to locate the next regeneration hot spots by taking the Government infrastructure spending into consideration.
The analysis that Howsy have undertaken highlighted that 34 areas are currently benefiting from government spending and therefore these areas are highly likely to see an upward trend of demand for rental properties. The locations were then analysed further, comparing the average property prices against the average rent per calendar month to calculate the average yield.
Topping the Howsy list of premium areas to invest is the regeneration of Dundee Waterfront. The £1 billion investment project set out over a 30-year period to transform an 8km stretch of Dundee City Waterfront comprising of 240 hectares.
Commencing in 2001, the project is now over halfway through the development plan and significant key infrastructure milestones have been completed such as the new railway station opening along with the opening of the V&A Museum of Design.
The new multi-purpose city hub comprises of hotels, residential apartments, office spaces and commercial premises with ideal transport links, creating the perfect living location for many types of demographics.
Dundee the city itself has also undertaken a revolution. Once famous for textiles, the city has developed over time into a strong, varied economy including a mix of light manufacturing companies, financial services and gaming developing companies bringing a mix of jobs to the city.
As Mortgageable highlighted the combination of the attractive property prices, (especially compared to the property prices within the South East of England) and the average rental income that investors are likely to receive, has landed the Dundee Waterfront location to trump the top of Howsy’s investment return list estimating an average monthly yield of 7.2%.
Liverpool Tens Streets
The Liverpool Docklands development, Tens Streets have secured the second position within Howsy’s analysis, producing roughly a 6.4% return on investment each month.
Liverpool has a varied economy as well as a diverse population including a strong student and young professional demographic, which can be ideal for the rental market. In addition, Liverpool will benefit from HS2 transport links from two stations; Liverpool Lime Street and Runcorn, which will also bring further investment and companies to the city centre.
Destination Bootle, Liverpool
The third position on the Howsy’s investment return list is also a Liverpool location.
The Bootle project is aiming to create an energy efficient residential community for families in the suburb of Liverpool, just ten minutes from the city centre. The local area is set to receive significant regeneration investment including the Waters Development Scheme and Inward Investment, creating local jobs and subsequently further property demand.
In addition to the residential development, the longer term development plan of the area includes new retail and commercial Quarters, as well as leisure facilities that will all combine to create an attractive living location.
Halifax has recently reported that Bootle is the top destination for buy to let investors and therefore confidence and appetite is already growing for investment opportunities in Bootle.
Regeneration hot spots summary
Scotland and the North have featured heavily on the Howsy’s research analysis and therefore may encourage investors who would traditionally invest in the South to explore a larger return on their investments up North.
Even during the construction phases, the cities mentioned will experience a boom in the demand for rental property as the construction workers typically stay locally during the working week. Once development projects edge nearer to completion, young professionals, students and families will seek to relocate either due to work or studying opportunities.
Announcements of further government infrastructure investment continue to add confidence to economy and subsequently the property market, especially in areas where regeneration schemes have already been announced, including improvements to transport links.
As with most investments, a longer term version is required and no return on investment can ever be guaranteed, however with larger yields possible, particularly in Dundee and Liverpool, the attractive market conditions are very encouraging.