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UK house prices have been predicted to rise in the next five years, to bring the average property value to almost £300,000, according to new research from Barclays.

Research shows property hotspots emerging in the North with employment opportunities and business start-up rates helping to close the gap on property hubs of London and the South

Buy-to-let investments and high net worth millennial investors are set to lead the way in fueling the property market.

 

The Barclays UK Property Predictor, provides a three-to-five year forecast of investment hotspots in the residential property market. Barclays have revealed the areas across the UK where their research shows house prices and rental incomes are expected to rise. The research uses factors including rental trends, employment levels and commuter behavior as well as current house prices to create an index of property hotspots. The research also surveyed high net worth investors from across the UK, to reveal where and why they plan to purchase property in the future.

Amongst specific hotspots likely to see much larger than average increases in this period, identified by Barclays, are Richmond upon Thames (forecast to rise 39.1 per cent), St Albans (up 38.8 per cent) and Camden in London (increasing 33.9 per cent). 

“It’s encouraging to see that property is still viewed as an important part of the investment portfolio with high net worth investors typically owning three properties and over a quarter planning to buy property because they believe that it offers long-term investment security” explains Dena Brumpton, chief executive of Barclays’ wealth and investments division. 

“There is also increasing confidence among property investors, as many are taking a long-term view when it comes to putting money into property. It’s also interesting to see from our research how investment prospects are emerging outside of the established property heartland of London and the South of England, with economic growth and employment opportunity fueling growth in hotspots across the UK.”

 

Northern hotspots emerge

Over the next five years, high employment rates, growth in private housing market levels and an increase in rates of average earnings will contribute to rising property prices across the UK. The South is expected to see the largest annual property price increase over this period, however property investors are looking north of the property hubs of London and the South East for good value for money and income stability. Over a third (38%) of high net worth investors (HNWI) looking to purchase property in northern regions think that property prices are going to rise there, with over a quarter (27%) who plan to purchase citing strong rental income as a reason to invest there.

The Midlands has the fourth highest expected annual price increase in the UK at 1.22%, behind London, the East of England and the South East. Warwick in the West Midlands has emerged as one of the top 20 areas of highest growth, with an expected annual increase of 5.31%, driven by higher-than-average earning rates and the highest level of business start-up rates in the region. Scotland has the fifth highest expected annual price increase at 1.15%. East Renfrewshire makes the top 20 areas of highest growth with an expected annual increase of 4.37%, with its large proportion of highly qualified residents expected to drive up prices.

 

Millennials are reaping the rewards of property investment

Barclays research shows that younger HNWIs will be a key driver in the growth of the UK property market over the next three-to-five years. The millennial investors surveyed have 41% of their investment portfolio tied up in property, compared to 23% amongst those aged over 55.  They are also more bullish in their approach to investing in bricks and mortar with 75% intending to increase the percentage of their portfolio in property over the next three-to-five years, compared to just 10% of over 55s. This is however typical when you consider the lending age constraints of the over 55's limiting leverage in traditional BTL investment.

Millennial investors are also more likely to own more than one property, compared to over 55s, and are reaping the financial rewards of multiple property ownership with almost half (48%) of their annual income generated from rent. Those under 55 (18-54 year olds) who are planning to buy new property are more likely to take advantage of a buy-to-let mortgage product to fund future property purchases, 23% compared to just 7% of over 55s. There will be a new method of helping the over 55's launched soon to alleviate the lending blocks so call Earnest Knight on 0208 6109 472 and ask if you are restricted by finance but still want to make great property returns

 

Buy-to-let investment on the rise

Investors are leaning on buy-to-let to fuel their property portfolios, despite the recent changes to buy-to-let tax. Higher value investors are seeking to maximise returns through property purchases, with nearly two-thirds (65%) of those looking to buy doing so for rental income. Sixty-two per cent of those with rental properties expect the proportion of the income they receive from rent to increase over the next three-to-five years, with half predicting it will rise by up to 20%.

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