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London Falling

Not all about London anymore. The London housing market is struggling with prices falling for the first time in 8 years. At a record drop of 0.6% in September this year, London is the weakest performing region in the UK for the first time since 2005. Image credit: http://bit.ly/2gcAlkU

Increasingly, statistics reveal that growth is expanding outside London. The focus — be it for housing, jobs, resources, or investment — has moved to buzzing regional cities where business is booming on the back of lower costs and a higher quality of living.

The London housing market is struggling. Nationwide reports that London house prices have fallen for the first time in 8 years, and, at a record drop of 0.6% in September this year, London is the weakest performing region in the UK for the first time since 2005.

Outside London and across the UK, however — despite Brexit and concerns about the economy — prices are still rising, albeit at a slower pace than in recent years. And yet, while London’s house prices may have dropped, they remain unapproachable compared to the cities beyond.

To date, house prices charting the most significant increases in England and Wales are the Midlands* and Northwestern cities of Manchester and Liverpool, as well as in some pockets off central London like Luton and Guildford, and Northern Ireland.

A chart published recently in the Financial Times shows house prices falling in London and the South East but growing elsewhere. Image credit: Financial Times; source: RICS

Greener Investment Pastures Beyond London

Years of rapid price increases have made London and the south unaffordable to many buyers, prompting them to buy further away and commute. After all, it takes less than an hour to travel from Bedford or Luton  to central London by train, while cities like Birmingham, Manchester and Liverpool have a buzzing business scene.

The signs have been there for a while now, says Virata Thaivasigamony of CSI Prop, an active property investment consultancy in Kuala Lumpur, Malaysia that promotes investments in UK and Australian property.

“The writing has been on the wall for some time and we’ve said that prices in London will flatline this year. London has always been regarded as the business capital and startup central of the UK, but the fact is that businesses and investments are moving outside of London and into the regional cities. It would be remiss of us to ignore that the best places to invest in are now in those cities,” he elaborates.

What’s Trending

Manchester, popularly assumed as UK’s second city and the Silicon Valley of Britain, is fast earning a reputation as the hotbed of tech and startup talent in the UK, thus pushing property prices up. The city is also a recipient of billions in investment dollars, thanks, in part, to the government’s push for the Northern Powerhouse, propelling the rise in investment returns across central and Greater Manchester, including Salford as well as other Northern Powerhouse core cities like Liverpool.

Prices of property have been rising in Northwestern cities such as Manchester, as more corporations move from London to this city to set up headquarters and make use of its resources and talent pool. Image credit: http://bit.ly/2hEX3Um

Corporations are decentralising from London to the regional cities, too. BBC, ITV and HSBC come to mind, having set up home in Greater Manchester; airlines such as Hong Kong’s Cathay Pacific have since 2014 provided direct flights between Manchester and Hong Kong, while China’s Hainan Airlines launched a direct flight service in 2016, making Manchester Airport the only British hub outside London to have non-stop flights to Beijing.

Meanwhile, Berkeley, one of Britain’s best-known luxury housebuilders has broken out of London to build a business in Birmingham to cater to housing demand in the city.

Javad Marandi, a British businessman with investments in commercial and residential real estate says, “Regional markets including the North East, the South West and Yorkshire and Humber have shown growth in commercial property activity, a sure sign of a growing business environment with an increasingly positive outlook, making them one of the best regions to invest in. Building a workforce, free of soaring London living costs, will in turn be cheaper to employ – and no doubt happier with the favourable cost of living outside the capital.”

That Britain is plagued by a serious undersupply in housing is an understatement. Opportunities in these cities have expanded the population, further underscoring the acute demand and need for housing. From a property investment standpoint, this is a good thing.

Meanwhile, a number of university cities are showing a spike in house prices. Towns that are home to a large student population such as Guildford and Liverpool, are seeing a surge in prices. The biggest 3-year percentage house price rise was near the University of Bedfordshire, which has its main campus in Luton, charting a 42% increase in prices over the period of an undergraduate degree.

“The best regions to invest in lie outside the capital – it’s no longer all about London,” Marandi concludes.

Statistics by RICS indicate that house prices are set to rise across England next year except for London. Image credit: Financial Times; source: RICS

Growth Outside London  

The UK is still seen as a good and safe place to invest your money due to a weakened pound, and, in spite of uncertainties arising from Brexit.

House prices will continue to rise as demand increases and Britain grapples with a chronic housing undersupply, but it appears — for now — that the best investment opportunities lie in regional cities like Manchester and Liverpool, and the outer boroughs of London.

That said, it is crucial to note that London is a market within a market, with characteristics of its own, and that it will bounce back — just as the housing market in the Midlands* bounced back from a low in 2015 to become one of Britain’s fast-growing housing markets today. On a positive note, it is during these low-market times that savvy investors invest in order to reap the most luscious of fruits when the market bounces back.

Article by Vivienne Pal


CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts and due diligence. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

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