North outperforming the South for property investors
The property market in the North of England is outperforming the South for both capital appreciation and rental yields.
Property investments in the North of England are outperforming the South in terms of capital appreciation and rental yields.
In the North, the average house price has increased from £205,875 to £211,392 in the twelve months to last May – an annual growth of 2.7%, according to research from the property investment platform Sourced Franchise.
In the South, the average price has grown from £385,719 to £388,917 – an annual increase of 0.8%.
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Property investors up North see profits
The top four performing regions over the year have all been in the North. The North East leads the way with annual growth of 4%, followed by the East Midlands (3.4%), North West (2.7%), and West Midlands (2.2%).
The best-performing Southern region is the South East, with growth of 1.5% in the year to May.
“There has long been a disparity between England’s Northern and Southern housing markets,” Sourced Franchise director Chris Kirkwood says.
“But historically, the common narrative has been a booming South and a struggling North. Our latest analysis proves that when it comes to property investment, it simply isn’t that black and white.
“The North is now outperforming the South on multiple fronts and is, in many ways, now the driving force of positive growth.
“For property investors, the North now offers much better opportunities.
“Not only are prices significantly more affordable than the South, making it the more accessible market, but returns are also markedly stronger.”
The strongest yields are currently available in North West (5.5%) and Yorkshire & Humber (4.9%). London boasts yields of 4.7%, as does the North East, followed by the West Midlands (4.4%).
Table shows house prices, equity growth, ave rent, and ave yields in English regions between May 2022 and May 2023
| Location | North / South | AveHP - May 2022 | AveHP - May 2023 | Annual equity growth | Ave Rent pm - June 2022 | Ave Rent pm - June 2023 | Ave annual rental growth |
|---|---|---|---|---|---|---|---|
| North East | North | £152,650 | £158,779 | 4.00% | £588 | £625 | 6.30% |
| East Midlands | North | £239,175 | £247,242 | 3.40% | £770 | £832 | 8.10% |
| North West | North | £206,283 | £211,790 | 2.70% | £883 | £967 | 9.50% |
| West Midlands region | North | £242,840 | £248,166 | 2.20% | £826 | £915 | 10.80% |
| South East | South | £382,976 | £388,873 | 1.50% | £1,191 | £1,306 | 9.70% |
| Yorkshire and The Humber | North | £202,221 | £204,588 | 1.20% | £761 | £828 | 8.80% |
| South West | South | £320,514 | £323,765 | 1.00% | 1,053 | £1,128 | 7.10% |
| London | South | £521,561 | £525,629 | 0.80% | £1,846 | £2,077 | 12.50% |
| East of England | South | £345,749 | £345,710 | 0.00% | £1,071 | £1,166 | 8.90% |
Source: Sourced Franchise
Rental growth lags in the North
The North-South divide is much blurrier when it comes to rent. In the North, the average rent value has increased by 8.7%, from £759 per month to £824.
The strongest regional growth has been recorded in London (12.5%), followed by the West Midlands (10.8%), South East (9.7%), North West (9.5%), and East of England (8.9%).
Annual growth in the South has surged, with rent values rising by 9.5%, from £1,255 per month to £1,374.
“For property investors, the North now offers much better opportunities. Not only are prices significantly more affordable than the South, making it the more accessible market, but returns are also markedly stronger,” Kirkwood says.
“Much of this is being driven by a shift of national focus away from London and towards cities such as Birmingham, Manchester, Liverpool, and Newcastle. We’re seeing major businesses move north from the capital, including the likes of Channel 4 and the BBC, and we’re also seeing young families escape the claustrophobic prices in the South for the more accessible markets up North,” he adds.
