The South West, and Cornwall in particular, should be capturing the attention of property investors despite the economic challenges posed by Covid-19.
That’s according to Reece Mennie, the chief executive and co-founder of investment company Hunter Jones.
Despite the economy being badly impacted by the coronavirus crisis, he believes the UK property market is hot right now, with the industry seeing a ‘surprising and much-welcomed resurgence’ since it was allowed to reopen in mid-May.
Property prices are at an all-time high, with the average UK home now standing at around £241,604, a 3.8% increase on a year ago, according to the most recent Halifax House Price Index.
“A national housing shortage, coupled with Chancellor Rishi Sunak’s ‘summer budget’ stamp duty holiday, has resulted in a buying surge, which has rapidly pushed up prices,” Mennie says.
“Unfortunately, not everyone is in the position to enjoy the benefits of owning their own home, so it is no surprise that rental demand has also increased, by as much as 20% according to property listings website Rightmove.”
This is evidenced, Mennie adds, by the latest research from the British Property Federation (BPF) which revealed this month that between the second quarter of 2019 and the same period of 2020, completed Build to Rent homes rose by 37% while the number in planning soared by 27%.
“With Prime Minister Boris Johnson’s economic recovery motto being ‘build, build, build’ and Housing Secretary Robert Jenrick overhauling the country’s outdated planning system in order to create ‘better-quality neighbourhoods and homes across the country’, there has never been a more reassuring time to buy, rent or invest, and one such place is the South West of England,” Mennie argues.
Why the South West?
Famous for its delicious produce including pasties, seafood and cider, the South West region is a tourism hotspot, thanks in part to ‘its splendid coastline, sandy beaches, rolling hills and silty estuaries’.
Mennie, who is also the chief executive of HJ Collection and a big supporter of alternative investment, points to the fact that the South West is home to eleven areas of outstanding natural beauty, four UNESCO World Heritage Sites and two National Parks.
“For those sick of the hustle and bustle of city living, its remoteness and tranquillity really must be experienced first-hand,” Mennie advises. “However, if you are more interested in investment returns, you will not be disappointed. Look beyond the region’s idyllic façade to consider the facts and figures, and you will find an area thriving with business, infrastructure, investment activity and most importantly opportunity.”
With an economy worth £25.5 billion, four world-class universities, four airports and two ports, Mennie believes the South West can certainly be described as an attractive place to do business and ‘a gateway to Europe’.
“It is no surprise, then, that it makes an important contribution to the UK’s GDP, being home to companies drawn from such sectors as biotechnology and pharmaceuticals, environment, and renewable energy - as well as, of course, food and drink. It would be remiss to also not mention its large concentration of global aerospace players and diverse supply chain of 800 companies supporting approximately 98,000 jobs in the wider economy."
Given these advantages, he says, it is clear why the South West was crowned the happiest region to live in Britain, according to a nationwide survey carried out last year by Lloyds Bank and YouGov.
“It is no wonder that people are flocking to it and this is reflected in its housing activity. Lettings management platform Howsy recently revealed that the South West was in the top three of UK regions for annual house price growth and current average rental yield,” Mennie explains.
The average price of properties in the region, according to Rightmove, currently stands at around £296,910, which is much cheaper than the South East (£409,329) and London (£636,742) – the regions often touted as investment hotspots.
“Interestingly, it has also benefited from the strongest annual rental price growth since May 2020, at 2.5%, according to the latest figures from the Office for National Statistics (ONS),” Mennie continues.
Cornwall – a property investment case study
Mennie says that, while there are numerous South West locations for investors to put their money into, a good starting point for those unfamiliar with the region is Cornwall – which showcases the area’s potential better than any other.
Situated at the extreme southwestern peninsula of England, Cornwall is the ninth largest county in the UK and renowned for being an area of outstanding natural beauty. This is probably the main reason why it is officially one of the UK’s favourite holiday destinations, having been voted number one in the British Travel Awards numerous times over the years.
“Naturally, hotels, leisure and tourism are the foundation of Cornwall’s economy, accounting for as much as 25% of the jobs and a significant proportion of the region's GDP in many areas,” Mennie says.
“In the summer, tourists flock to Cornwall and the population can soar. The town of Newquay, for example, famous for its excellent surfing conditions, can see its population rise from around 22,000 people to well over 100,000.”
According to Rightmove, most of the sales in Cornwall last year had an overall average price of £277,988 and house prices were up 4% on the year before and 9% up on 2017 (when they averaged at £254,555).
“Such has been the demand for holiday homes that website cottages.com revealed an increase of up to 25% in just one week after the Chancellor made his stamp duty holiday announcement, while visits to its ‘Let Your Property’ pages increased by 180%,” Mennie says.
“If the opening arises to secure a foot into the exclusive and highly contested Cornwall property market, any investor that does so can be confident they will benefit from a secure and lucrative opportunity, safe in the knowledge that Cornwall will always remain a highly attractive location for tourism.”