Interesting research from Barclays has provided a three-to-five year forecast of property investment hotspots for the residential market. It highlights the regions of Britain where property prices and rental incomes are most expected to rise.
Using factors such as rental trends, levels of employment and commuter behaviour, Barclays has been able to collate an Index of property hotspots.
What’s more, the research quizzed high-net worth investors from around Britain, in order to ascertain where and why they plan to buy property in the coming years.
The report reveals that despite economic and political uncertainty, the UK property market is buoyant, with prices in the UK set to increase by an average of 6.1% by 2021.
This will bring the average value of a property in the UK to nearly £300,000.
It comes as no surprise that the South is tipped to see the largest annual property price rises over the next five years. However, savvy investors are looking north of London and the South East, in order to achieve better value for money and stronger yields.
38% of high net worth investors actively looking in the North said they feel prices in this region will rise. 27% cited high rental growth as their main reason in purchasing there.
Millennials making a mark
A very interesting feature from the research reveals that younger high net worth investors will be a key driver in UK property growth during the next three-to-five years.
Millennial investors surveyed have 41% of their investment portfolio in property, in comparison to 23% of the over 55’s. 75% of millennial investors also said they plan to add to their portfolio in the period.
What’s more, millennial investors were found to be more likely to own more than one property than the over 55’s. It appears they are generating rewards, with 48% of their annual income generated from rents. Of these investors between 18-54 planning on purchasing additional properties, 23% said they were likely to take advantage of a buy-to-let mortgage product.
Despite recent changes to buy-to-let mortgage interest tax relief, it appears that many landlords surveyed as sticking by their investment. 62% with rental properties said they expected rental income to increase in the next three-to-five years, with half of these expecting rents to rise up to 20%.
Dena Brumpton, CEO of Wealth & Investments at Barclays. Observed: ‘It’s encouraging to see that property is still viewed as an important part of the investment portfolio with high net worth investors typically owning three properties and over a quarter planning to buy property because they believe that it offers long-term investment security.’
‘There is also increasing confidence among property investors, as many are taking a long-term view when it comes to putting money into property. It’s also interesting to see from our research how investment prospects are emerging outside of the established property heartland of London and the South of England, with economic growth and employment opportunity fuelling growth in hotspots across the UK,’ she added.