Most landlords will take potential rental returns and possible capital growth into account when making a property investment. But how far do you look ahead when it comes to the appreciation of your investment’s value?
Online estate agent eMoov.co.uk has assessed which locations across the UK will record the strongest house price inflation, and therefore capital growth, over the next ten years, to 2027.
Although house price growth across the UK has been somewhat subdued since June 2016’s Brexit vote, landlords can still expect a strong return on investment in certain cities over the next decade.
The average house price has risen by an average of just 0.37% per month since the vote to leave the EU, compared to 0.67% a month between June 2015-16.
But, even if the market continues stalling at an increase of 0.37% per month, the average UK home will still hit £347,757 by 2027 – a rise of 56%, which is not exactly a poor return on investment.
eMoov has analysed the latest month-on-month house price growth data from June 2016 to June 2017, using Land Registry figures. It then applied this rate of growth to the current average house price in all UK cities up to 2027 to obtain a new average property value.
Top five locations
London has seen a real slowdown in price growth since Brexit, and so, although the capital would still be one of the most expensive cities in the UK (alongside Oxford), it would have seen one of the lowest percentage increases in value.
It’s actually Nottingham that’s top of the table in terms of average monthly house price growth since Brexit, at 0.8%, meaning that the average property value would increase by 160% from the current £133,215 to £346,592 by 2027.
House prices in Glasgow have risen by an average of 0.7% per month since June last year – the second highest rate in the UK. If this rate of growth continues, the Scottish city would see prices hit an average of £285,487 by 2027 – a jump of 131%.
Oxford ties fourth place with Cardiff, with an average monthly growth rate of 0.64% over the past year. As a result, the city would see its already pricey cost of property (£413,240) surge by 115% to an eye-watering £888,542 in ten years’ time.
Flying the flag for Wales is Cardiff, with an average monthly house price rise of 0.64% since June last year. If this continues, it would result in an increase of 115% by 2027, taking the average property value to £427,799.
Scotland’s capital and the country’s second entry in the top five is Edinburgh, which has seen prices rise by an average of 0.63% every month since June 2016. The same rate of growth over the next decade would see the average price exceed half a million (£506,627) – an increase of 112%.
Bottom three areas
Even those areas that have seen some of the lowest rates of growth since Brexit would still be in for some return on investment, albeit smaller than elsewhere in the UK.
Newcastle is the city to have recorded the smallest rate of growth since June 2016, having seen an average rise of 0.07% each month. The average house price in the North East location is now £156,753 and, although the same minimal monthly growth would only see a 9% increase over the next ten years, a jump of £13,731 to £170,485 is still significant.
Surprisingly, Norwich has recorded the second lowest rate of monthly growth since Brexit, at an average of 0.12%. But this is still enough to see a 15% jump to £222,749 over the next decade, from the current average of £192,892.
Investors in the capital have seen an average monthly increase in their properties’ values of just 0.18% since June last year. Nevertheless, this will still push the average price to £597,544 by 2027, making it the second most expensive city in the UK, despite a lower growth rate of 24%.
If you’re looking at possible locations for a future property investment, the three above are wise cities to avoid. For strong capital growth, consider the top five areas highlighted by eMoov.
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The Founder and CEO of eMoov, Russell Quirk, comments: “With latest industry figures indicating an end to the post-Brexit market slowdown that has seemingly plagued the market over the last 18 months, many UK homeowners will be breathing a sigh of relief, despite having still enjoyed a notable annual increase in their property’s value.
“Although these recent slower rates of price growth are unlikely to persist going forward, and we are by no means predicting they will, this research demonstrates that the outlook would still be rather positive and far from the apocalyptic prophecies many have talked the market down with since the Brexit vote.”