Navigating the UK Property Market: Best Places to Invest In Property

There’s a reason the phrase goes “location, location, location”. When investing in a property, it is vital to choose the correct location to ensure robust returns, long-term capital growth, and unlock profitable opportunities.

Considered as one of the most stable property markets to invest in, the UK has become a hotspot for investors worldwide, drawing them in with a combination of enticing benefits. These include anything from attractive rental incomes to stable environments to grow your wealth.

But where is the best place to invest in property in the UK? Whether you are a first-time investor or an overseas buyer, navigating the UK property market can be challenging. That’s why we have compiled this comprehensive guide which will help you identify some of the best places to buy property in the UK. Let’s explore.

Beyond Location: Investment Strategies at Play

Before you can start considering actual locations, you’ll need to determine your investment objectives.

Understanding Different Investment Goals

One of the main benefits of property investment is that income is generated via two options: capital growth and rental yield.

Capital growth, also known as capital appreciation, refers to the increasing value of a purchased property over time. Rental yield is the return you expect to make on a property. Those whose main goal is capital appreciation are typically looking for long-term growth, whereas those who focus on rental yields tend to aim for short-term goals, such as quickly and easily increasing their income.

While most buy-to-let investors benefit from both types of return, understanding which of these motivates your investment will ultimately help drive your decision on where and what type of property to invest in.

Additionally, in the early stages of investment, you will want to explore and research the different types of property investment. These include:

• Traditional Buy-to-Lets
• HMOs (Houses in Multiple Occupation)
• Property Flips
• Student Accommodation
• Hotels

If you would like to know more about which types of real estate investment you should be thinking about, check out our guide here.

Regional Investment Hotspots

With global economies steadying, the housing market has been on the road to recovery since the end of the Covid-19 pandemic. This was evident in 2023 when cash buyers and investors formed the second largest type of buyers, behind first-time buyers.

From bustling cityscapes to up-and-coming regional hotspots, there are several exciting property investment opportunities with strong growth potential. Here are few of the best places to invest in property in UK:

London

Average property price: £528,000

Annual rent growth: +4.2%

Average monthly rent: £2,121

As the largest (and capital) city in the UK, it is no surprise that London is a highly-sought after location for property investors around the world. With a rich cultural heritage, strong economy, and well-developed infrastructure, London has become a desirable location for investment, particularly for foreign investors.

While London has notoriously high house prices, this should not be something that scares you. In fact, the housing market in London is relatively stable and always performs well when it comes to  rental income and capital appreciation. While average rents in London are almost double the UK average of £1,220 according to Zoopla’s property report, investors can expect a good return on investment (ROI) and a healthy consistent flow of rental income. It should be noted that ROI and rental yield does depend significantly on the type of property you buy and the location, which may mean you need to consider additional factors such as service charges and ground rent in London to calculate your profits.

Edinburgh

Average property price: £332,000

Annual rent growth: +15.8%

Average monthly rent: £1,330

The Scottish property market has long been a point of interest for investors. This culturally rich location, known for its beautifully intricate architecture and booming economy, has become a prime destination for those seeking strong returns and minimal risks. Edinburgh, Scotland’s capital, is a particularly promising location for property and business ventures due to its strong rental market, driven by a growing population of students, professionals, and tourists. Furthermore, Edinburgh tends to have higher property prices than the rest of the UK, and while these prices are expected to rise in the coming years, the city’s demand for rental properties means you can anticipate stable rental income and capital growth in the future.

Birmingham

Average property price: £230,000

Annual rent growth: +13.5%

Average monthly rent: £989

As the second largest city in the UK and boasting the largest economy outside of London, this city has seen significant growth and transformation in recent years, with a GVA of £22.3 billion in 2021. Despite experiencing significant growth (over 70%) in the last decade, Birmingham’s property prices remain considerably lower than other major UK cities like London and Manchester — presenting investors an opportunity to capitalise on future appreciation. With Birmingham’s Big City Plan regeneration project vastly underway, this ongoing transformation is expected to further enhance the city’s appeal and drive property values upwards.

Birmingham is also a great city for investors looking for strong rental yields and seeking a good ROI as the rental yields in Birmingham are typically higher than the UK average. Also compared to other major UK cities, Birmingham offers relatively affordable properties, making it an attractive entry point for first-time investors or those seeking to build their property portfolio.

Manchester

Average property price: £238,000

Annual rent growth: +12.2%

Average monthly rent: £1205

Manchester, also known as the powerhouse of the North, has earned its title for a reason. With a strong rental market, growing population, and ongoing development initiatives, property in Manchester presents an ideal environment for buy-to-let investments. In line with the government’s Levelling Up agenda, Manchester has prioritised house-building initiatives to combat the increased demands for affordable housing. The city has witnessed substantial investments in residential developments, catering to a diverse range of housing needs and creating promising prospects for property investors.

Moreover, according to forecasts by JLL, Manchester is predicted to be the strongest city for house price growth until 2027. They also forecasted that Manchester would oversee an impressive 19.3% five-year house price growth forecast through to 2027 — which you should definitely keep in mind if you’re still thinking about where to invest. If you would like to learn more about what Manchester has to offer, check out our guide here.

Liverpool

Average property price: £175,000

Annual rent growth: +8.7%

Average monthly rent: £769

Thanks to its thriving economy, vibrant cultural scene, and  ongoing commitment to the Levelling Up agenda, Liverpool has emerged as an attractive option for investors seeking long-term returns and sustainable growth. The city’s diverse and thriving economy, charged by its finance, creative industries, and digital technology sectors, has fueled the demand for housing, thus creating a robust rental market. Alongside this, Liverpool boasts excellent transport links, including an international airport and multiple train stations, which has enhanced the city’s accessibility and facilitated economic growth.

Data-Driven Insights & Market Analysis

According to the JLL Residential Forecast of 2024, as more competitive rates enter the market, they expect house prices to rise by +2% nationally this year. With most UK cities continuing to attract young professionals, they have forecasted that the unprecedented demand for urban living will remain strong and contribute to the robust market performance over the next five years.

The real estate market can be complex and ever-changing. By following property forecasts and market analysis, you can gain valuable insights into future trends and make strategic decisions about where and when to invest. This can also help you anticipate potential risks, such as a cooling market or rising interest rates, and identify areas with high growth potential.

There are many online market research tools available that can help you keep track of trends. However,  if you are looking for professional expertise and market insights, feel free to get in touch with one of the team members here at Alesco today.

Making Informed Decisions

Don’t underestimate the power of an up-and coming area within a region. While a city might be experiencing overall growth, and it is easy to get caught up with regional trends, it is important to keep your eye on micro-markets and niche opportunities that could have some hidden investment potential. Look for up-and-coming neighbourhoods undergoing regeneration or those close to planned infrastructure projects. Consider niche opportunities like student housing near universities or high-end retirement or assisted living communities.

Remember a successful investment strategy hinges on your investment goals and budget. Before diving in, consider how much you can realistically afford and whether you prioritise rental income or long-term capital gains. By carefully weighing these factors alongside a deep understanding of regional trends, you can make informed decisions that maximise your return on investment.

Investing for Success: Partnering with a Property Investment Specialist

Investors considering property investment can greatly benefit from partnering with a property investment specialist. Here a few reasons why:

• Expertise and market knowledge: The property market is complex and full of intricacies. A specialist possesses in-depth knowledge of the market and can help guide you through the process.

• Strategic guidance: Beyond suggesting properties for your portfolio, a specialist can offer you a personalised investment strategy which considers your finances and investment goals.

• Risk mitigation: Property investment comes with inherent risks. However, a property investment specialist can help you identify and mitigate these risks by thoroughly evaluating these properties and ensuring they align with your investment goals. Here at Alesco, we perform extensive due diligence and have a risk management process for all the properties in our portfolio to give our clients a piece of mind when investing.

• Access to exclusive investment opportunities: Finding the right property is crucial for the success of your investment. Specialists will have access to the most exclusive opportunities available on the market, which may mean you gain access to high-value properties that have not been made available to the public.

Working With Us

Looking for the next best location? At Alesco, we are committed to helping you find the right property and assisting new and seasoned investors start and grow their property portfolios. Contact us to find out more or begin investing today.