The latest batch of housing data may not make great reading for most but are the Northern lights still shining brightly for property investors? John Wriglesworth investigates
Another week and we have another pile of housing market statistics reporting further falls in house prices. The Office of the Deputy Prime Minister (ODPM), the Royal Institute of Chartered Surveyors (RICS) and SmartNewHomes.com have all posted their snapshots of the housing market with the general consensus being that house prices are dipping, both annually and monthly.
All this adds to the evidence being presented by many commentators calling the top of the buy-to-let sector and the end of the property market’s role as a ‘surefire money spinner’.
However, an alternative viewpoint comes from property investors surveyed by the Property Investor and Homebuyer Show North taking place next weekend in Manchester.
The survey revealed that 84.9 per cent of property investors are relying on their property portfolios and their own homes to provide their future wealth, emphasising the long-term expectations of serious investors.
Almost three-quarters (72 per cent) believe that the UK housing market will rise or remain stable over the remainder of this year and when asked specifically about the prospects of the Northern market, this figure increases to 86 per cent, indicating that property in the North is being viewed by many as a future hotspot.
Of those who reported that they would be expanding their buy-to-let portfolios in the near future, 37.5 per cent specified they would be buying properties in the North compared to 20.3 per cent in the rest of the UK and 42.2 per cent looking at overseas properties. This illustrates the confidence among property investors that the Northern market still holds investment potential.
Positive slant
Looking back at the house price figures released this week, all have a positive slant for our friends in the North. The ODPM reported that the highest inflation rates in England remain in the North West (12.9 per cent) and the North East (11.9 per cent) compared to a national average inflation rate of 6.9 per cent in March 2005.
SmartNewHomes.com also reported that the average price of new homes currently for sale in the North increased by 4.2 per cent over the last 12 months.
In addition, the North West has one of the highest ‘migration rates’ in the country with 3.3 per cent more people looking to move into the region than live there while London has reverse traffic with a -5.4 per cent migration figure.
Migration from the South to the North is not restricted to homebuyers either. Many companies are choosing to relocate out of London, motivated by cheaper rents and labour, and improved regional infrastructures.
The BBC’s planned move to Manchester within the next five years will see approximately 1,800 staff moving North, resulting in an estimated 2,000 spin-off jobs and an extra £750 million in economic activity, prompting much speculation on the potential for house price growth in the area.
Sharp investors are currently waiting to see which sites the BBC will be moving to but the decision is expected to be between the Piccadilly area, currently undergoing major regeneration, or around the Granada base, creating a media cluster in the city.
Regeneration
Several other large-scale regeneration projects also have the potential to reignite interest in alternative parts of Manchester. As already mentioned, a £125 million regeneration project is underway at Piccadilly Place with plans for a 600,000 square foot major mixed-use scheme comprising shops, offices, a hotel, apartments, car parking and a new pedestrian bridge to Manchester Piccadilly Station.
The Castlefield area of the city is already home to many modern apartment schemes with high rental potential and Middlewood Locks, bridging Manchester city centre and Salford, is looking to be the next focus for buyers and investors.
Both areas follow in the footsteps of the Albert Docks in Liverpool, one of the most successful regeneration schemes in the North West, comprising residential properties, shops, offices and leisure facilities.
Travel issues
Another key factor for property market observers in Manchester is the status of the proposed Metrolink extension. Although currently on hold, the government promised in its election manifesto to reinstate additional funding which will see the project completed.
This will provide a tram stop within two minutes for the majority of the Manchester’s population with three new lines providing connections to South Manchester and Manchester Airport, Rochdale, Oldham and Ashton.
Student accommodation is a huge area for buy-to-let and many cities in the North have very high student populations. Leeds University has the highest number of student applications in the UK with both Manchester and Manchester Metropolitan Universities also featuring in the top five.
Across to the North East, several major mixed-use regeneration schemes with millions of pounds worth of investment are underway including Middlesborough’s Middle Haven and Hartlepool’s Victoria Harbour.
Together with the major investment into areas such as Durham Airport and Sunderland’s 15-year overhaul of its transport network, these could act to boost property prices in an area which currently sees the cheapest average house prices in the UK.
It is clear that many aspects of the Northern housing market remain conducive to long-term positive growth and that there are many reasons why the North can be seen as the answer to property investors’ prayers. However the extent to which the reality will match the optimism remains to be seen.
John Wriglesworth is managing director of The Wriglesworth Consultancy
