As is typical of any property market, location has significantly influenced property prices, leading to a ‘three-speed’ housing market in the UK.
Zoopla notes the most prominent annual price drops in Southern England, which includes the Eastern, South East, and South West regions excluding London. These areas have been affected by rising mortgage rates and decreased buyer power, resulting in an average home price of £344,000, which is 30% higher than the UK average.
On the other hand, the London property market stands out from the rest of Southern England. Despite being the most expensive housing market, with an average price of a buy-to-let property in London at £534,000, it has experienced much lower levels of house price inflation over the past seven years. Affordability has slowly improved during this period, making the market accessible to more potential buyers.
However, many buy-to-let investors are looking further afield in search of the best place to invest in property in the UK due to London’s substantial property prices and rental costs.
The surge in demand and limited growth in available homes for sale (only 7% higher compared to 21% for the UK) explain why the annual price inflation rate is increasing more rapidly than in the Southern England regions.
Although house price growth has slowed considerably over the past year in the rest of the UK, annual price declines have been minimal. The Zoopla House Price Index shows that house prices in these areas either match or are lower than the UK average. The impact of higher mortgage rates on purchasing power has been less pronounced.
These factors attract buy-to-let investors to areas like the North West, where cities like Manchester and Liverpool boast strong economies and huge tenant demand but also have more affordable property prices and rental costs. These are all things investors look at when searching for safe investments in the UK.
