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Britain’s Affordable Property Hotspots

Tue 29 Mar 2016

For many – especially first-time buyers – the words “affordable” and “property” create a compound that is wholeheartedly oxymoronic. And while it’s true that when we talk about “affordable property” we must do so in relative terms, there nonetheless remains certain pockets throughout the UK where one is met with a large selection houses priced well below the national average.

Indeed, affordability is of utmost concern for many families looking to buy a home – as is well-known (if perhaps not yet well enough appreciated) by the government, which finds itself under increasing pressure to provide more affordable housing up and down the nation.

Liverpool Tops The List

According to research by consumer watchdog Which? – which, in a bid to smooth out any volatility in prices that would have skewed the data, took the average price of property between 2011 and 2014 and compared it to the average for the year to November 2015 – Liverpool has emerged as the number one hotspot for affordable properties in the UK.

Despite the fact that the city has seen the average price of a home rise by a considerable 40% – from £85,000 to £120,000 – over the past five years, these prices are still well below the UK average of £200,000.

The research only considered properties valued under £200,000. But, it should be noted that these areas have been ranked in order of those that witnessed the largest increases in property prices over the last 12 months – which, in other words, represent a win-win situation for buyers. As such, Conwy (in Wales) and Bradford take second and third place, rising 37% and 36% respectively.

Indeed, these are areas in which affordable homes are rife, but the prices of those homes are only going one way – up. As such, it is viewed that these locations are ideal for both investors who want to expand their portfolios, and first-time buyers looking to get on the property ladder.

David Blake, at Which? Mortgage Advisers, commented:

“For a first-time buyer or a buy-to-let investor, these up and coming areas can provide an affordable alternative to buying in an already established area. You could see your property grow in value quickly, but it's important to remember that property markets can change, and there is never a cast-iron guarantee that values will continue to rise.

“A mortgage is a significant financial commitment that needs to be considered carefully. Seeking independent mortgage advice early on is vital in order to know what options are open to you.”

Beyond Liverpool

The Which? research – which took its findings from Land Registry data – found that Conwy’s ‘LL27’ increased from £135,000 between 2011 and 2014, to £185,000 in 2015. Meanwhile, at ‘BD1’ in Bradford, prices grew from £42,000 to £57,000 over the same period.

Even so, despite growth percentages well above the national average in these areas, the actual property prices are still way below the UK average – and indeed Bradford is the cheapest of the lot against these criteria.

Surprisingly, it’s still possible to find affordable places to buy property in the capital. Postcode DA18 in Bexley, south-east London, sees an average property price of £191,500, which is well under the national average, though nonetheless up an impressive 32%.

Managing director of Sequre Property Investment Graham Davidson comments on the property hotspots:

“In the midst of a property boom, it’s important to note that there are still affordable properties on the market that can provide high returns. Cities such as Liverpool have seen incrediannable growth prospects in recent years, but due to prices growing at a healthy and sustainable rate, they occasionally remain under the radar to investors. This positive news will no doubt attract more investors to these northern cities.

“It’s also worth noting that these affordable locations are seeing average house prices below £125,000 in the city centre. To delve slightly lower, Bradford city centre benefits from average prices around the £60,000 mark. This is unheard of anywhere in the south, particularly in London. As the stamp duty changes come into force next month, investors can rest assured that additional costs will be far lower on investment property in the north. Those chasing capital growth with buy to let properties in the south will face a hefty price.”

Averages On The Rise

The Which? research comes hot on the heels of a report in January from Nationwide, which found that the UK’s average property price had risen 4.5% year on year, equating to £196,699.

Then in February the figures were up again – now to 4.8% year on year, and reaching £196,930. The hike came after a particularly strong market showing in December, where UK property prices rose 0.8% month on month, representing the strongest monthly increase since April.

Growing employment, lowering mortgage rates and increased earnings have all led to a rise in consumer confidence, resulting in sustained interest from buyers.

“Further healthy gains in employment and rising wages are likely to bolster buyer sentiment, while borrowing costs are expected to rise only gradually,” said Robert Gardner, Nationwide’s Chief Economist.

“However, the main concern is that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability.”

Indeed, with demand for housing still far outstripping supply – the latest RICS survey revealed that new instructions fell for the 15th time in 16 months in November – average UK house price growth is expected to reach 6% in 2016. But for those looking to cash in, then buying a property in one of these most impressive hotspots could be the most sensible and lucrative move you can make in 2016.