When looking at property locations context is everything. Whether city centre, commute to the city centre or suburb, the property price and returns are what makes the investment.
A cheaper property out of the city that returns more may be better than an overpriced in heart of the city centre, equally a lower-performing city at a cheaper price, may not be as good an investment as a higher-performing higher-priced property.
Focus on the fundamentals of property. Supply & Demand, growing wealth, population density. This means you have a lot of people wanting to rent and/ or buy your property, pushing rentals and property prices up. See our ‘Secrets to investing in UK property’ video here.
So why do experienced investors target core city centres?
Quite simply put, if affordable areas with the highest historic growth, lots of tenant and buyer demand, and growing earnings will tend to give you the most consistent returns.
The natural landscaper of a city centre means that there can only be a certain amount of properties within walking distance. That means that there is a ‘microclimate’ where no more buildings can be built, then the only that can be built are done by clearing land meaning prices will naturally get higher and higher and higher, until affordability has been maximised, like what happened in London.
The next 10 years, therefore, are some of the best years to buy into the likes of Manchester or Birmingham as they have some of the highest recent growth and will follow London and London commuter cities in growing until the local area cant allow it to grow any more.
This could mean that you will see 10 – 15 years of growth in property value and rent with an almost 100% occupancy rate. This, even if the yield is marginally lower can also present lower risk and therefore much more popular for consistent investors.