Last week, Hometrack (Part of the Zoopla Property Group) has released their House Price Index Guide for the month of July. Looking at July in the context of the last 12 months offers an interesting piece of research for property investors looking to invest in the UK. Below, we have looked at some of the key takeaways from this exciting piece of research.

To view a full copy of the report, click here.

The UK Property Market Continues to Grow

The key finding of this report is that the UK Property Market continues to grow. With consistent year on year growth for the whole of the UK along with a number of key cities outperforming the average, the future looks bright for UK property investors.

This bodes especially well going forward due to the current uncertainty in the property market from external factors such as Brexit and the ramifications of leaving the EU as well as the large-scale movement of people and employment north from London to locations such as Manchester, Liverpool and Birmingham.

It is worth noting only 2 of the UK’s 20 biggest cities have experienced negative growth over the last 12 months, one of those being London.

London slips into Negative Growth

The July report shows the first time that London is now averaging negative growth over the last 12 months. Until now, London’s average has been boosted by a strong Q4 of 2017 and Q1 of 2018, but the last 6 months have seen consistent price decreases across the city. Another key reason why London can see drastic price changes is due to the price disparity between the highest value property and the lower-valued property located on the outskirts. As an example, if 10 central London properties reduced their prices by as little as 1{32a70e766e49c95f504e78d863f700cc0bc860776959e311316a05ffc4828dc8}, this could have a drastic effect on the property market forecast as this 1{32a70e766e49c95f504e78d863f700cc0bc860776959e311316a05ffc4828dc8} change could be worth millions.

Despite this, it is not all doom and gloom for investors, as due to London’s size, there are attractive areas of the capital still available to those looking to invest in London.

West London is a key example of this with property prices in the area averaging 40{32a70e766e49c95f504e78d863f700cc0bc860776959e311316a05ffc4828dc8} lower than the rest of London while still offering strong returns and capital appreciation.

Top 5 Cities for Growth all in Midlands & North

One of the more interesting findings from the report is that the 5 highest growing cities in the UK (over the last 12 months) are all located in the north of England or the Midlands. There are several key factors that play into this:

North-Shoring of Employment Opportunities

The cost of office and commercial space in the UK’s capital continues to be prohibitive for small business and a large liability for major employers. As these businesses look away from London for cheaper options, increased infrastructure and skilled talent pools in cities such as Manchester and Birmingham have led to an increase in major employers moving to these cities. In recent months, HMRC, HSBC and many others have moved major headquarters to Birmingham while the BBC and Price Waterhouse Cooper have moved to Manchester to join businesses like Google, The Co-operative Group and the Guardian Newspaper who were already based in the city.

These employment opportunities have driven demand in the centres of these cities as employees look to move closer to their new office as well as take advantage of the excellent local amenities.

Northern Powerhouse & The Midland Engine Growth Projects

The Northern Powerhouse initiative in the North of England has driven investment into the area with increases in spending on infrastructure, transport, international trade and more. This increased investment has drastically improved the economic fortunes of the North of England.

Following this success, HM Government launched the Midlands Engine initiative to drive investment into the Midlands, focusing on the West Midlands and Birmingham, these initiatives combined are aiming to close the gap between London and the South-East of England and the rest of the country, with many economic forecasts showing they are achieving this aim.