New Barclays research reveals top property investment hotspots in the UK with average 6.1% price increase expected by 2021 24 May 2017 07:30 The Barclays UK Property Predictor reveals property prices across the UK will rise by 6.1% in the next five years, bringing the average property value to almost £300,000 Research shows property hotspots emerging in the North with employment opportunities and business start-up rates helping to close the gap on property hubs of London and the South Buy-to-let investments and high net worth millennial investors are set to lead the way in fuelling the property market New research released today, the Barclays UK Property Predictor, provides a three-to-five year forecast of investment hotspots on the residential property market, revealing the areas across the UK where house prices and rental incomes are expected to rise. The research uses factors including rental trends, employment levels and commuter behaviour as well as current house prices to create an index of property hotspots. The research also surveyed high net worth investors from across the UK, to reveal where and why they plan to purchase property in the future. According to the research, and despite an uncertain economic and political climate, the UK property market remains buoyant with prices in areas across the UK set to rise by an average of 6.1% by 2021, bringing the average value of a UK property to almost £300,000. Northern property hotspots emerge Over the next five years, high employment rates, growth in private housing market levels and an increase in rates of average earnings will contribute to rising property prices across the UK. The South is expected to see the largest annual property price increase over this period, however property investors are looking north of the property hubs of London and the South East for good value for money and income stability. Over a third (38%) of high net worth investors (HNWI) looking to purchase property in northern regions think that property prices are going to rise there, with over a quarter (27%) who plan to purchase citing strong rental income as a reason to invest there. The Midlands has the fourth highest expected annual price increase in the UK at 1.22%, behind London, the East of England and the South East. Warwick in the West Midlands has emerged as one of the top 20 areas of highest growth, with an expected annual increase of 5.31%, driven by higher-than-average earning rates and the highest level of business start-up rates in the region. Scotland has the fifth highest expected annual price increase at 1.15%. East Renfrewshire makes the top 20 areas of highest growth with an expected annual increase of 4.37%, with its large proportion of highly qualified residents expected to drive up prices. Millennials reap the rewards of property investment The research reveals that younger HNWIs will be a key driver in the growth of the UK property market over the next three-to-five years. The millennial investors surveyed have 41% of their investment portfolio tied up in property, compared to 23% amongst those aged over 55. They are also more bullish in their approach to investing in bricks and mortar with 75% intending to increase the percentage of their portfolio in property over the next three-to-five years, compared to just 10% of over 55s. Millennial investors are also more likely to own more than one property, compared to over 55s, and are reaping the financial rewards of multiple property ownership with almost half (48%) of their annual income generated from rent. Those under 55 (18-54 year olds) who are planning to buy new property are more likely to take advantage of a buy-to-let mortgage product to fund future property purchases, 23% compared to just 7% of over 55s. Buy-to-let investment on the rise Investors are leaning on buy-to-let to fuel their property portfolios, despite the recent changes to buy-to-let tax. Higher value investors are seeking to maximise returns through property purchases, with nearly two-thirds (65%) of those looking to buy doing so for rental income. Sixty-two per cent of those with rental properties expect the proportion of the income they receive from rent to increase over the next three-to-five years, with half predicting it will rise by up to 20%. Dena Brumpton, CEO, Wealth & Investments, Barclays, said: “It’s encouraging to see that property is still viewed as an important part of the investment portfolio with high net worth investors typically owning three properties and over a quarter planning to buy property because they believe that it offers long-term investment security. “There is also increasing confidence among property investors, as many are taking a long-term view when it comes to putting money into property. It’s also interesting to see from our research how investment prospects are emerging outside of the established property heartland of London and the South of England, with economic growth and employment opportunity fuelling growth in hotspots across the UK. “We are here to support our clients at various stages of their investment journey and we can help by offering a range of innovative and personalised mortgage solutions to meet their individual needs, whether they are a seasoned investor or a millennial looking to increase their income.” Barclays UK Property Predictor UK Price Increase Region Expected average annual increase (%) Overall % increase (2017-2021) London 2.27% 11.88% East 1.81% 9.38% South East 1.69% 8.74% East Midlands 1.30% 6.67% West Midlands 1.15% 5.88% Scotland 1.15% 5.88% South West 1.04% 5.31% North East 0.88% 4.48% North West 0.79% 4.01% Yorkshire and The Humber 0.71% 3.60% Northern Ireland 0.60% 3.04% Wales 0.57% 2.88% The average overall UK price increase over the 2017-2021 period is expected to be 1.31% per annum. The overall increase expected over the 2017-2021 period is expected to be 6.1%. Current UK average house price is £274,000 (Source: Barclays Local Insights). Based on an expected increase of 6.1%, by 2021 the average value of a UK house will be nearly £300k (£290, 714). Barclays UK Property Predictor UK - Areas Region Area % increase Overall % increase (2017-2021) London Richmond upon Thames 6.82% 39.10% East St Albans 6.78% 38.80% East Three Rivers 6.12% 34.60% London Camden 6.02% 33.90% London Westminster 5.70% 31.90% South West Cotswold 5.67% 31.80% London Wandsworth 5.56% 31.10% East Uttlesford 5.38% 30.00% South East Mole Valley 5.35% 29.80% West Midlands Warwick 5.31% 29.50% East Midlands South Northamptonshire 5.27% 29.30% East Hertsmere 5.08% 28.10% South East Waverley 5.03% 27.80% South West East Dorset 4.96% 27.40% South East Elmbridge 4.79% 26.40% East Midlands Rushcliffe 4.65% 25.50% South East Windsor and Maidenhead 4.54% 24.90% Scotland East Renfrewshire 4.37% 23.80% South East Hart 4.29% 23.40% West Midlands Stratford-on-Avon 4.23% 23.00% For more information on the research please visit https://wealth.barclays.com/en_gb/home/research/research-centre/barclays-uk-property-predictor.html For more information on Barclays’ buy-to-let mortgages, please visit: http://www.barclays.co.uk/mortgages/buy-to-let-mortgages We are providing greater choice to individual landlord investors across the UK than ever before who are looking to purchase or remortgage rental properties to meet their longer term financial aims of, for example, enhancing their lifestyle in retirement or paying for their children’s university fees. Barclays will consider both personal and rental income for affordability purposes, helping individuals with a variety of income types to achieve their landlord aspirations. This ensures we have every type of mortgage to suit every possible individual landlord’s need. Disposable income cannot be used if the term of the mortgage takes the applicant into retirement. Notes to editors About the Property Predictor The Barclays UK Property Predictor is a piece of research compiled by Development Economics on behalf of Barclays. The methodology involved the collection and analysis of socio-economic data focusing on 12 key indicators, including past trends on property price and rental increases, current trends for employment levels, commuting patterns and earnings levels, and expected future trends for population growth and employment growth, with the future forecasts focusing on the 5-year period 2017-2021. The data covered every local authority area in the United Kingdom and was sourced from the following sources: Indicator Source Data Employment rate ONS Annual Population Survey (APS) Commuting ratio ONS Census and APS Population change ONS Population projections Business start-up rates ONS Business Demography datasets and Mid Year Population estimates Qualifications ONS Annual Population Survey (APS) Employment change Oxford Economics Employment forecasts Earnings ratios ONS Annual Survey of Hours and Earnings Life expectancy ONS Data on population Life Expectancy Air quality DEFRA Annual mean PM2.5 concentrations Housing affordability DCLG, Scottish Government, Northern Ireland Executive Housing affordability ratios House price trends DCLG, Scottish Government, Northern Ireland Executive Median house prices Market rent trends Valuation Office Agency Median market rents The focus of the data analysis and modelling was to identify property price change hotspots and coldspots over a 5-year time horizon. This analysis involved the ranking the expected future performance of local authority areas in each English region plus Wales, Scotland and Northern Ireland using the socio-economic data and analysis developed during the data review phase. The analysis also produced predictions of expected future house price changes in the top-ranked local authority in each country and region: these predictions were based on a methodology which utilised recent price trends as a starting point, but moderated to take into account short-to-medium term economic growth forecasts and local social and economic factors. Additional research was compiled by Opinium who surveyed 543 UK adults across 12 local government areas, aged 18 + with investable assets of over £500,000. About Barclays Barclays is a transatlantic consumer, corporate and investment bank offering products and services across personal, corporate and investment banking, credit cards and wealth management, with a strong presence in our two home markets of the UK and the US.With over 325 years of history and expertise in banking, Barclays operates in over 40 countries and employs approximately 120,000 people. Barclays moves, lends, invests and protects money for customers and clients worldwide. For further information about Barclays, please visit our website www.home.barclays .