Why I’m investing in the North of England

House prices continued to rise towards the end of last year, with the last three months seeing a 2.5% increase, according to the HPI.

With the rise in cost, the housing market saw a slight slowdown in activity last month - particularly across London and the South East. However, throughout the rest of the country it was a different story with sales continuing to pick-up, especially in the South West and North East of England.

Some of the strongest growth has been in the north of the country, with 55% of surveyors stating they have seen prices increase rather than decrease. Figures show that properties in the north, where traditionally you would always get more for your money are continuing to rise in value.

North Shields, for instance, saw a 10% increase in house price value over the last 12 months making it the property hot spot to watch out for in 2017. Nearby on the Tyne and Wear coast, prices have risen fastest in cash terms where homes were worth over £16,000 more at the end of 2016 than in the previous year.

While property values in the North East has been on the rise, rental incomes have also been seeing a boost. Looking at the rental market, surveyors expect rents to increase by around 5% per year on average over the next five years, given that the number of tenants are continuing to out-pace the supply of homes.

When looking at this from an investment point of view, the increase has now become surprisingly comparable in the north to the rest of the UK. In fact, many buy-to-let investors in the north are in fact now from London and the south of England.

Given that property prices in the North Eastern region, for example, are significantly lower than the south, with a three-bedroom semi-detached house in the region of £110,000, many investors and buy-to-let landlords are clearly getting more return for their money.

As the cost price is so much lower, and with high growth yields between 6% and 8% in big northern cities – many investors see this as an opportunity to achieve a greater investment return than interest from say a traditional savings account.

The rental markets in northern cities have seen rent rise three times as much as their southern counterparts of late. Although it may not seem like it, rates in London have been growing at their slowest rate since the economic downturn in 2008, showing signs that the rental divide between the north and south is starting to close.

With house prices continuing to grow and looking to outstrip the green commuter belt around London, it would appear that for investors looking to make money going forward, the best opportunities lie in the north of the country.

Mark Anderson is the founder of Crowd2Let.