Our top tips on where to invest in 2022.
For both first-time investors and experienced landlords with an extensive portfolio, the UK property market offers real opportunity in 2022. The national economy is recovering strongly following the Covid-19 pandemic, and the housing market continues to perform well.
The gap between supply and demand in the UK continues to widen. Figures from the National Housing Federation show that there is an annual shortfall of almost 100,000 new homes at the moment, and the number of new starts fell even further during Covid.
This backlog will have a beneficial effect for investors in the coming years, meaning that we may be at the start of an unusually strong five-year period for UK property. The Purpose-Built Student Accommodation market is also performing strongly and could be of interest for investors looking at an asset outside of the usual residential property market.
We’ve previously looked at how to decide where the best places are to invest, and here we have picked out some of our favourites which are particularly attractive for investors in 2022.
Manchester, residential property
Manchester has long been known as one of the UK’s top property investment hotspots, and its performance during Covid has only improved.
Rental demand has reached unprecedented new heights in Manchester’s most desirable city centre markets in the last 12 months. Rightmove recorded a 36% annual increase in demand in a year, and new research from urbanbubble shows that there were only 525 vacant residential properties in the whole city at the end of 2021 – this is compared to more than 2,000 at the end of 2020, and is in spite of just under 6,000 new apartments being completed in Manchester during 2021.
What’s more, the latest UK Residential Forecast report from JLL shows that rents in Manchester are set to increase by more than 15% in the next five years. This is far above the national average and a good sign for investors.
House prices are rising too, with Zoopla recording house price growth of 8.5% in Manchester over the course of 2021, and Savills predicting a further 25.8% of growth in the next five years. This is based on predictions of a large population increase of at least 70,000 people in the next decade according to Manchester City Council figures.
All of the above means that investors should strongly consider investing in Manchester property in 2022 thanks to this growth potential. To learn more about why Manchester is so popular with investors right now, click here.
London Commuter Belt, residential property
The London Commuter Belt is one of the UK’s most popular property investment markets. Its population is growing thanks to the number of people leaving Central London, and waves of regeneration are transforming Commuter Belt towns, creating desirable neighbourhoods which offer high quality job opportunities and an enviable lifestyle.
Jessica Tomlinson, Research Analyst at Savills, said: “Across the commuter belt, we’ve also begun to see a change in priorities with people seeking to be closer to transport links and lifestyle amenities in town and city centres, in contrast to the flight to country properties in village and rural locations seen throughout last year.”
Despite property prices growth of 10.4% over 2021, entry prices remain affordable and offer many of the benefits of buying in Central London without the cost. Furthermore, the latest residential forecast from Savills projects further house price growth (up to 17.1%) for the Commuter Belt in the next five years.
Rents in the Commuter Belt are also performing strongly, and in 2021 they hit their highest levels since 2007. Savills recorded an average rental increase of 7.3% last year, and has predicted further rental inflation of up to 13% for the Commuter Belt as a whole in the next five years in its most recent residential forecasts.
The London Commuter Belt has such a wide variety of properties and locations that there is something for everyone. More renters than ever before are realising this and are leaving London in response. This is a key trend of 2022 and makes the Commuter Belt a property investment area of interest.
You can learn more about why the London Commuter Belt is one of the UK’s most attractive property investment markets, including which towns within the Belt you should be targeting, in 2022 by clicking here.
Stoke-on-Trent, Purpose-Built Student Accommodation (PBSA)
What if you’re looking to invest in Purpose-Built Student Accommodation (PBSA) rather than residential property? That requires a slightly different market, and there are not many better options than Stoke-on-Trent.
Stoke enjoys a prime position 1 hour 15 minutes from London, 30 minutes from Birmingham and 40 minutes from Manchester – making it extremely attractive to businesses and, consequently, students and young graduates looking to build their careers. This is one of the UK’s most important university regions and is home to two of the country’s more impressive institutions – the University of Staffordshire (approx. 13,000 students) and Keele University (approx. 10,000 students).
Crucially, these two universities have strong links to business, and are a major factor in the area being one of the UK’s strongest areas for job growth according to the UK Powerhouse Report. The arrival of the HS2 high speed rail line will only help to create more jobs and boost the local economy (already worth £23bn) even further – making the area even more attractive to students.
The area also has a real shortage of high quality student accommodation at a time when student numbers are increasing, and the government is targeting an additional 200,000 international students annually by 2030.
It is for reasons like the above that, in the words of Merelina Sykes, Joint Head of Student Property at Knight Frank: “Global investors continue to acquire PBSA assets in the UK, fundamentally underpinned by the UK’s world renowned higher education system. The asset class offers a stable income stream, with strong year-on-year rental growth prospects. When compared to more mature, traditional asset classes, PBSA continues to stand out.”
To learn more about the PBSA investment market in the UK, and why it is such an attractive asset class, please click here.
2022 has the potential to be a good year for property investors, especially those investing in areas like the ones targeted above. Get in touch with our team today to learn more and get started with your next investment by clicking here.