Scotland’s capital city has once again ranked first in Colliers’ Top UK Residential Investment Cities report –securing the top spot for the third consecutive analysis.
In fact, there was little movement in the top 10 locations of the bi-annual report, with the top four cities remaining the same: Edinburgh (first); Glasgow (second); Manchester (third) and London (fourth). Reading returned to the top ten, rising six spots to rank fifth, thanks in part to the number of new start-up businesses in the area, and its predicted GDP growth of 2.5 per cent per annum over the next five years. The location also tops the indicator for the number of leisure facilities including swimming pools, gyms and health businesses available to residents.
Across the top ten, the only other city which moved was Oxford, down four places to ninth due to lower GDP forecasts, an increase in income inequality and a decline in the number of new businesses created, Oxford moved below Milton Keynes in sixth, Belfast in seventh and Cambridge in eighth. Cardiff held onto tenth position for the second report in a row.
Andrew White, Head of UK Residential at Colliers said: “After a number of years of turbulence and macroeconomic challenges, it’s interesting for investors to observe that there’s been a period of stability in the UK housing market, with locations that have been sure investments in recent times remaining at the top.”
Colliers’ biannual report analyses 20 locations within the UK against 24 indicators, including GDP, population growth, EPC rankings and leisure facilities. These indicators are grouped into five categories: economy, research and development, liveability, property and sustainability, to cover the various interests of residential investors.
“The Scottish cities are continuing to top our ranking,” White continued, “most likely due to the affordability and strong economic qualities of the region, as well as the quality of life indicators we consider. London and Manchester continue to be high performers because of the population mix of professionals, service workers and students, along with the cities being the home to thousands of multinational companies, providing continuous employment opportunities. There are also lots of infrastructure and leisure benefits which make these cities attractive places to live.”
Oliver Kolodseike, a director in Colliers Research & Economics team compiled the report. He added: “As is often the case with rankings that consider various data sources there can be a period of stability in the results. Often housing interventions from government can disrupt data, however if we consider the last six months of 2024 there were not many changes brought in by the new Labour Government that would have disturbed, positively or negatively, the housing market – and investor sentiment has remained fairly neutral. However with changes to stamp duty levels coming into effect in March – the same may not be said of our next analysis.” Read more
We expect more optimism in the UK residential real estate market in the remaining months of the year as the Bank of England had their first rate cut in August, marking the beginning of their rate cutting cycle.
Although average mortgage rates increased since the beginning of February, they have started to decrease again over the past month. The average 85% LTV rate is at 4.91% on a five-year fix as of July 31st, 2024.
Residential property transactions increased from 254,090 in Q1 2024 to 272,700 in Q2 2024. This is the second quarter in a row where transactions have increased.
Average UK rents have increased by 7.1% y/y in Q2 2024. At the same time, the build-to-rent pipeline has decreased by 10.8% y/y in Q2 2024. This underscores that construction of new rental properties is simply not keeping pace with demand.
• House prices increased by +0.8% y/y increase in Q1, the largest quarterly increase since Q4 2022. • Despite recent coverage of some banks reducing mortgage interest rates, overall rates continued to ascend since the beginning of February. The average 85% loan-to-value rate is just under 5% on a 5-year fix. Those looking to re-mortgage or buy a new home are pinning their hopes that the Bank of England’s Monetary Policy Committee (MPC) will decide to cut rates at their June meeting. It is hoped, this will then be interpreted by forward-looking lenders as a strong sign of a future trend of cuts. • Rental growth accelerated further, standing at 6.8% y/y in Q1 2024. This is an increase from 6.3% y/y in Q4 2023. This highlights the urgent need to build more rental properties in the UK as unaffordability is an issue for many renters. • The PMI’s Residential Activity Index averaged 48.0 in Q1 2024, the highest quarter since Q4 2022. This shows that despite delivery of new housing stock being slow, it is improving. • The rate of rental inflation may have stabilised as it hit 6.3% y/y in Q4 2023, a small decline from 6.4% y/y in Q3 2023
Register your interest with Colliers New Homes on 028 9024 4000 or via email on info@colliersni.com.
Bryon Halt will boast a luxurious collection of 2 bedroom apartments in Holywood, just a minutes walk from the coast - with each apartment finished to the same high-quality standard throughout.
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