Newcastle is the best UK university town or city for property investment, new research by AI-powered property investment portal One and Only Pro has revealed.
Despite the prestige, history and high university league table ranking of Oxford and Cambridge, these grand old cities don’t score very well when it comes to property investment, with Oxbridge offering much lower rental yields and capital appreciation than the top university towns and cities in the North East, North West and the Midlands.
The research found that Newcastle has the highest number of properties with ‘Diamond’ investment status – 12.8% - measured by One and Only Pro’s unique algorithm. Providing the most affordable property of all the university towns and cities analysed, the average Diamond property in Newcastle has a value of just £96,573.25.
In second position, with an average property price tag of just over £117,000, was Nottingham – home to 11.3% of Diamond properties. Next up was Leeds, which secured third with 6.5% of Diamond investment properties and an average Diamond property price of just over £103,000.
In fourth and fifth place, meanwhile, was Sheffield (5.8%) and Manchester (5.6), with both of these major university cities providing strong investment opportunities thanks to an average Diamond property price of £85,938.70 and £143,014.87 respectively.
One and Only Pro’s analysis ranked the top universities in England and Wales based on the percentage of Diamond properties on the market in June 2019, with investment properties given a score from one to ten. Properties rated ten are dubbed Diamond properties and are the most likely to rise in value. They are also viewed as a once in a lifetime investment, which will sell quickly.
Properties with scores between seven and nine are likely to outperform other similar properties.
“As expected, the highly sought-after university cities of Oxford and Cambridge are giving investors poor returns, thanks to inflated property prices and lower rental yields than many other parts of England and Wales,” Henri Sant Cassia, chief executive at One and Only Pro, said.
“With the BTL tax changes and increased stamp duty on second homes, it pays investors to avoid buying property in the top five ranked university cities in London and the South East, as average prices are very high and rental yields are much lower – averaging 4-6%, compared with properties in the North West, which offers rental yields in excess of 10%.”
Sant Cassia said that less-sought after areas such as Newcastle provide a better option, enabling investors to earn nearly 71% return on investment. “This figure includes the costs of buildings insurance, a gas safety check, service charges and ground rents and it is all calculated automatically on our website,” he added.
“With this kind of return, savvy investors could have earned their deposit back within two years. In many towns and cities with returns like this, a property’s mortgage can be cleared from the returns within several years and then investors have full ownership.”
One and Only Pro predicts which properties are most likely to see the highest yields and capital growth, using a mathematical analysis to provide investors, lenders and mortgage brokers with an easy-to-understand scoring system, in turn allowing them to identify the best deals on the market. The unique algorithm highlights the properties most likely to rise in value and also reveals potential yields.
The website currently hosts more than 210,000 opportunities, with almost 9,000 of these below market value and nearly 25,000 listings yielding higher than 7%.