House prices across the UK are on the rise, with experts predicting that the house price boom will continue for at least a year. However, data suggests that the North of England is performing particularly well and is the region most responsible for propelling UK-wide average house price rises sky-high to 6.5 per cent in the year to January 2021.
In fact, analysis has found that the further North in England you head, the higher the house price growth as the country’s Northern cities continue to attract interest from investors and tenants alike.
The research conducted by build to rent specialist Ascend Properties indicates that the North West of England has enjoyed the highest annual price changes of 12 per cent in the year to January 2021, followed by Yorkshire and the Humber at 8.9 per cent and the North East at 8.5 per cent (see table below). Collectively, average house prices increased by a huge 9.8 per cent in the North, compared to 6.6 per cent in the Midlands and 6.4 per cent in the South over the last year.
This steep house price inflation in the North West has increased average prices in the region to £184,234; Yorkshire and the Humber prices averaged out at £179,248 while the North East average house price has increased to £138,151.
While prices are on the up in the North, home purchases are still very affordable for investors and owner-occupiers with property prices across the Northern region averaging out at £167,211, less than half the typical price in the South of £357,257.
An East-West Divide
Curiously, the researchers found there also appears to be an East-West divide developing in middle England.
The East Midlands, with an average house price change of 7.6 per cent, outperformed every area in the South in terms of price growth, while the West Midlands saw the lowest growth in the country (4.7%).
This contrast could be due to the fact that buyers’ needs are changing and they are moving out of the largest cities in search of green space due to the pandemic, which Ascend suggests perhaps explains why the West Midlands, which houses the UK’s second-largest city, Birmingham, is lagging behind.
The data shows there’s a similar trend emerging in London, which recorded the second-lowest average house price growth of 5.3 per cent across England.
The Midlands Leads on Rental Growth
When it comes to rental growth however the North trails behind most of England both in terms of price and average annual change. The regional average house rental in the North costs £665 per calendar month (pcm) an average change of +2 per cent compared to £720pcm in the Midlands, which boasts the highest average change of +6.8 per cent. While the South, which still commands the highest average rental price of £1,139 per month, managed a 3.7 per cent increase in average rent charged to January 2021 (see table below).
Rental yields strongest up North – despite slipping annually
Although rental yields in the North declined marginally year-on-year to January 2021 (see table below), rental yields in the region were still the highest in England averaging 5.2 per cent, compared to 4.1 per cent in the Midlands and 3.8 per cent in the South. Yorkshire and the Humber, in particular, was the northern region that recorded England’s best rental yields of +6 per cent. So, the North remains a good investment choice for landlords.
Managing Director of Ascend properties, Ged McPartlin, commented: “The North of England has long been where investors can get bang for their buck, and the study certifies why.
“Stronger rental yields, affordable prices for buyers and renters alike, as well as rising prices, make the region a hotbed of activity.
“The only surprise is that yields have fallen in the North, though if prices continue to rise in those regions that should dwarf a small decrease in yearly income.”