Top 10 UK cities for Buy-To-Let (BTL) investing

Picking the top 10 metro locations; a public discussion

In a report from Lucian Cook, Savills’ Director of Residential Research, he makes the point that house prices, inflation adjusted, are below where they were 10 years ago. Yes, after stripping out inflation, house prices in 145 local markets are below where they were in 2005. Of the 179 local markets in England and Wales, only 34 are at or above the price levels of 2005 without inflation. Lipstick on a pig? Making a losing bet look like a winner by adding inflation? Or still a savvy opportunity if you understand the economics?

Backing up a bit, what is the bigger picture? When people ask about house prices in the UK, is it a sensible question?

The key message in Lucian’s report is that the UK housing market is made up of many micro markets. The UK is the sum of four (4) countries (England, Wales, Scotland and Northern Ireland. Trends in one do not automatically map to trends in another.

The report only focus only on England and Wales (E&W). Mostly because of how the data is collected by external entities. Zeroing in on the E&W housing market you find is the ‘ market’ really an amalgamation of the local markets. The local markets are more closely aligned to the economic trends in each community. That means there could be  179 ‘local’ answers to how the market is doing. And that is just in England and Wales.

If you were allocating investment funds and distance from your home did not matter, focus on local economic indicators and demographic trends to predict success. Forget the conversations about the UK housing market as if it is one thing. Stop looking for hotspots. Forget today’s interest rate or what LTV a lender will offer. It is the economy and the demographics at a local level which drives your future investing success. As they say, location is the only thing you can not correct once you own the property. Price, condition, financing and seller motivation really do not make up for a bad location longer term.

Pick 10-12 ‘communities’ which you believe should be on the list of the top BTL investment locations in the UK. Post your list in the comments. Even if you can only come up with a few please add them to the discussion. The wisdom of crowds implies that we can find the answer even if no one person knew the answer before the exercise started.

I will add to the discussion as I find more information that is relevant.

Enjoy the two quotes from the Savills report.

“The UK housing market is an amalgamation of local markets with different drivers. Understanding what the future holds at a local level requires an understanding of where each market sits in the housing market cycle and the underlying pressures on housing.”

“Despite widespread concerns over the cost of housing, Land Registry figures indicate that on average house prices across England and Wales have fallen by 16% on an inflation-adjusted basis over the past 10 years. Prices are below their level 10 years ago in real terms in 145 of the 179 local markets covered by the index.”

Crossing The Trend-Line
Lucian Cook
24 June 2015

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