Why the Northern Powerhouse will be the future of the property market’s growth
Over the past few years, the north of England has started to mount something of a challenge to the south of the country when it comes to being an economic powerhouse. The rise of Manchester’s digital centres, Liverpool’s improving education sector and the new and improved legal and digital businesses thriving in Leeds have all helped the region to become one of the strongest in the UK.
In years to come, the north is likely to continue to improve as a prospect for investors as well. Growth in business and education in any city improves the chance of people moving to these places, swelling the demand for rental properties therein and seeing a greater number of homes in demand. It means investors in new purpose-built rented accommodation being able to see real potential for growth in their returns over a number of years.
The reason behind the growth in the north of England is simple; the Northern Powerhouse. This is a concept that was designed to be a vehicle for growth away from more traditional markets in the south of England, dreamed up by the coalition government between 2010 and 2015. It was intended as a driver of political and economic growth in the north, with investment targeted at improving investment and movement of labour and business towards this area of the country.
But what does make the Northern Powerhouse such a strong concept, and how will it continue to push the region forward in years to come? Here, we take a look at some of the headline factors involved in the sector in the north and how it will continue to improve the prospects of the buy-to-let sector for investors in the area for years to come.
The economy of the Northern Powerhouse region is one of the largest in the entire country. With Manchester, Leeds, Liverpool and Sheffield driving it forward, the area provides thousands of jobs, across many growing sectors, and university places for young people who want to come and live in the north.
It means that at the moment, according to governmental data, the Northern Powerhouse accounts for as much as 19.2 per cent of the GDP for the entire country, with Westminster saying that the history of innovation, entrepreneurship and commercial success is likely to push this forward even further in the years to come.
One of the most interesting aspects of the Northern Powerhouse as a concept for property investors is that it offers a real chance to buy property safe in the knowledge that you’ll be able to let it to people working in the region. Unlike in London, where people tend to commute to work from further out, in the Northern Powerhouse, the majority of people tend to live and work reasonably close together.
According to a Centre for Cities study, as many as 92 per cent of the people who work in the Northern Powerhouse cities also live in the region. This means investors are able to buy in the north without worrying that the upwardly mobile young professionals who move there for work will be looking for somewhere else to live. As a result of this attitude of living and working in close proximity, investors in rental properties are likely to see a swell in demand in years to come as more and more businesses move to the north, bringing skilled staff along with them.
One of the most prominent asset classes for investors in the UK in recent years has been the student property market. With more than £11 billion invested in just a few short years, thanks to growing student numbers and new demand for high-quality homes, it’s clear that it’s a sector on the rise. And in the Northern Powerhouse, this is only likely to improve even further in the next few years, thanks to the quality of education that can be found in the region, and the improvements in collaboration and teaching likely to be brought about by developments like the Northern Quarter in Liverpool.
Strong universities and courses attract high numbers of students, and this only serves to improve demand for investors in property. According to the Centre for Cities, the Northern Powerhouse currently has 23 universities, and six of these are ranked among the top 20 performers in the UK, which can only help to improve the number who are coming to university, and further push the cities forward as fantastic places to invest in property. Cities like Manchester, Liverpool and Leeds already have multiple universities, and some of the highest student numbers around. Data shows that there are half a million students at university around the UK, and nearly 200,000 of these are studying in the north’s three largest cities.
With the Northern Powerhouse likely to bring more skilled work to the north, the chances of this swelling even more are high, and this can only be seen as a positive for any investor, both in the student and mainstream rental property markets across the north.