New annual data from Commercial Trust Limited shows that the South East almost caught London for buy to let purchase market-share during 2017.
A report from the specialist buy-to-let mortgage broker, showed a 3.4% growth in the South East, from 2016 to 2017, narrowing the market-share gap with London to just 0.3%, in part as the capital saw a reduction.
The North West was another region to do particularly well in the report. Commercial Trust Limited reported a second consecutive year of growth in 2017, up 3.1% from 2016, followed by the North East which was up 0.9%.
The figures maintained recent trends which have seen both regions increase their market share year-on-year since 2015; Yorkshire and Humber was another region to increase its market share for new purchases.
Commenting on the data, Andrew Turner, chief executive at Commercial Trust Limited, said:
“The traditional dominance of London as a hub for buy to let investment has undoubtedly shifted somewhat during 2017, with more choosing to invest in areas where property prices are cheaper and rental yields higher in light of changes in the buy to let marketplace.
“There is a growing trend for people looking to rent outside central London, to places with good transport links, but where rental prices are lower. This is creating reinvigorated demand in the South East from commuters, while for investors, property prices here are slightly less prohibitive than in London.
“This goes some way to explaining the changing market share dynamics at Commercial Trust Limited, where the South East has continued to gain ground on London and is almost on a par now.
“The price of property and therefore stamp duty in London remains the highest in the country, which is another factor under consideration with investors.
“As the nucleus for UK business and the country’s capital, London will always draw huge numbers to work and live there. However, higher upfront costs and lower anticipated capital growth, ahead of the Brexit outcome, are likely to be contributory to investor reticence in the capital.
“Elsewhere, the North West and North East continue to attract growth in buy to let applications. Landlords, like tenants, can see the attraction of economically regenerated cities such as Liverpool and Manchester, where more jobs have been created, developing growing demand for rental homes.
“These areas have seen house price growth, but the average cost of a house in the North of England is significantly less than in London, whilst the rental yields outperform the capital. So it is only natural that more landlords are looking north for property investment.
“When you factor in the vast sums of Government investment in places like Hull, Manchester and Liverpool, you get a picture of thriving local economies offering people work opportunities and a lower cost of living than the capital. This is leading to internal migration to these industry hubs and is in turn developing increased demand in the private rental sector prompting some landlords to identify investable regions.
“However, the influence of London and the South East is still obvious from our statistics, with the two regions accounting for almost a third of overall new purchase applications in 2017.”