Natalie With Brexit and COVID lockdowns, the property market in the UK was expected to take a downturn in the property market. But 2021 has seen the UK property market boom for both residential and commercial buildings. So where are the best property investment areas in the UK in 2021?
Where Is The Best Property Investment Area In The UK?
The best property investment areas depend on your investment goal. If you want to invest in a property to grow in value for you to resell, you will want to identify the best areas for capital growth. But if you want to invest in a property to rent out, you should consider areas that are better for rental yield.
Here is a guide to the best places in the UK for affordability, capital growth, and rental yield.
Where Is The Best Area For Affordability?
With house prices rising all over the UK, the only city not seeing an increase in property prices month on month in 2021 is London. But the average London house price is £514,000, which might be above most investor’s budgets.
By contrast, other cities in the UK are more affordable for city centre properties. The most affordable cities in the UK for investors are:
Liverpool with an average property price of £185,000
Glasgow with an average property price of £206,000
Sheffield with an average property price of £224,000
Manchester with an average property price of £240,000
Where Is The Best Area For Capital Growth?
Capital growth is the rise of property prices over time. Investing in areas in the UK with good capital growth should give you an affordable property in an area with a strengthening economy that will appreciate in value.
Liverpool has seen an 8% growth in the last 5 years and 21% over the last 10 years
Birmingham has seen a 14% growth in the last 5 years and 32% over the last 10 years
Manchester has seen an 16% growth in the last 5 years and 35% over the last 10 years
Where Is The Best Rental Yield In The UK?
Rental yield is the return of money you get on property investment in the form of monthly rent. The rule for calculating the rental yield is taking the annual rental income of the property, divide it by the paid price, and multiply this number by 100. For example, if anyone has a property that costs £140,000, the landlord will ask for £600 rent i-e the yield will be 1.5%.
2020 saw rental prices increase very slightly, particularly in the North West. The West Midlands saw a 0.9% raise and the South-west a 0.6% rise. But COVID-19 has seen rental yields take a dip in some areas, particularly in the East. The East Midlands has experienced the largest fall in yields that is -1.2% and Yorkshire following closely.
The average rental yield and prices in the UK for 2021 are:
| CITIES | AVG. RENT | AVG.ANNUAL RENT | YIELD (%) |
| Manchester | £1,232 | £14,784 | 7.29% |
| Birmingham | £1,145 | £13,740 | 6.68% |
| Nottingham | £1,376 | £16,512 | 7.28% |
| Bristol | £1,883 | £22,596 | 6.88% |
| Leeds | £1,192 | £14,304 | 6.22% |
| Cardiff | £1,304 | £15,648 | 6.18% |
| Liverpool | £1,463 | £17,556 | 5.71% |
| Leicester | £980 | £11,760 | 4.77% |
| London | £2,622 | £31,464 | 4.72% |
| Edinburgh | £1,191 | £14,292 | 4.71% |
| Derby | £795 | £9,540 | 4.70% |
| Hull | £487 | £5,844 | 4.27% |
| Aberdeen | £635 | £7,620 | 3.54% |
So the best rental yields in 2021 are in the North West, particularly in and around Manchester.
Where Is The Best Place To Invest In The UK?
Based on property price, rental yields, and capital growth, the best place to invest in the UK is Salford in Manchester.
The average asking price of a house at Salford is £173,311 and the rental price is £1,051 per month. If you are looking for maximum profit, you should invest in these areas, so that you can earn an average rental yield of 7.27%.
Steps For Investing In UK Property
If you are ready to invest in UK property but are a first-time investor, there are some general tips and pieces of advice that you should bear in mind.
-
Decide On Resale Or Buy-To-Let
-
Choose Your Area
-
Make An Offer On A Property
-
Organise Your Finances
-
Factor In Costs
-
Provide For Your Target Tennant
-
Consider A Property Management Company
When you are ready to start investing in UK property, you should start your search online. Look at house prices of different areas, research the economic growth of different areas, and start your search.
You can start your search for a UK property investment with Spot Blue. Our listings include holiday homes, flats, studios, and homes for sale all over the UK.
