Northern Stars: Why Liverpool, Newcastle and Manchester Are the Property Investment Sweet Spots of 2025
The UK property market has long been a tale of two halves: the affluent South with its high prices and tight margins, and the more affordable North, where potential for capital growth and stronger yields continues to shine. The latest May 2025 UK House Price Index by Hometrack makes one thing abundantly clear: the smart money in 2025 is heading north. And three cities stand out above the rest: Liverpool, Newcastle, and Manchester.
Whether you’re a seasoned investor looking to expand your portfolio or a first-timer hunting for high-growth potential, here’s why these northern cities should be on your radar.
1. A Market Rebounding and Reshaping
After a subdued few years marked by mortgage turmoil and affordability challenges, the UK housing market is experiencing a clear rebound. Sales agreed in May 2025 were 6% higher than a year ago, the highest post-Easter sales levels seen in four years.
Driving this resurgence are lower mortgage rates and more relaxed affordability testing, which allow buyers to borrow up to 20% more. There’s also more stock on the market, with a 13% year-on-year increase in homes for sale, further boosting buyer activity and investor confidence.
Yet not all regions are benefitting equally. While the South of England grapples with slow growth and oversupply, the North West and North East are buzzing, with Liverpool, Newcastle, and Manchester leading the charge.
2. Liverpool: Steady Growth and Exceptional Value
Liverpool continues to deliver a compelling combination of affordability, regeneration, and resilience.
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Average price (April 2025): £162,900
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Year-on-year price growth: 3.0% (up from 1.9% in 2024)
This level of growth might seem modest compared to some of the explosive figures seen in the 2021 boom, but it’s precisely what makes Liverpool so attractive in 2025. This is sustainable, consistent appreciation — the kind of environment that seasoned investors crave.
Liverpool’s economy is also undergoing rapid diversification. With investments in tech, healthcare, logistics, and its world-renowned cultural and sporting sectors, rental demand remains strong, particularly among students and young professionals.
In real terms, you’re still buying significantly below the UK average (£268,200) and benefiting from rental yields upwards of 7% in some postcodes, particularly in L1, L3, and L7.
3. Newcastle: Affordable Growth with Northern Grit
Often overlooked, Newcastle is quietly becoming one of the North East’s strongest performers.
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Average price (April 2025): £158,600
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Year-on-year price growth: 2.7% (up from 1.7% in 2024)
This 1% jump in annual price inflation indicates growing confidence in Newcastle’s market, and investors are starting to take note. With the recent surge in infrastructure development, such as upgrades to the Metro system and green urban planning initiatives, the city is becoming increasingly appealing to both renters and homeowners.
Newcastle’s affordability, too, is striking. With house prices well below the national average, the city offers investors a low entry point and excellent potential for capital appreciation. Areas like Jesmond, Heaton and Sandyford are particularly popular with students and professionals, ensuring strong occupancy rates and dependable rental income.
4. Manchester: Northern Powerhouse in Full Flow
Manchester’s star continues to rise, showing both strong capital growth and resilience.
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Average price (April 2025): £230,800
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Year-on-year price growth: 2.5% (up from 1.8% in 2024)
While Manchester sits at a higher price point than Liverpool and Newcastle, it still offers excellent relative value compared to cities in the South, especially when you consider the city’s unmatched combination of economic dynamism, cultural appeal, and employment opportunities.
Manchester benefits from a tech boom, major university presence, media giants like the BBC and ITV, and one of the country’s largest student populations. The spillover effect from central Manchester is also boosting prices in nearby satellite towns such as Stockport, Salford and Bolton.
Perhaps most significantly, demand continues to outpace supply. The report notes that the North West only has 3% more homes for sale than a year ago, in contrast to Southern regions where supply has flooded the market. That scarcity is supporting stronger price growth and ensuring competitive bidding environments, particularly for well-located, turnkey buy-to-lets.
5. The Bigger Picture: Why the North Is Outpacing the South
What’s striking in the Hometrack report is the divergence between the northern and southern halves of the country. In the South:
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House price inflation is under 1% across all regions
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Supply is up as much as 21% in the South West and 17% in London
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This oversupply, coupled with affordability constraints, is flattening growth
In contrast, the North West boasts 3% price growth, with 14% more sales agreed year-on-year. Fewer homes for sale, better affordability, and strong demand are combining to create a tight, competitive marketplace. For investors, this means stronger upward pressure on rents, faster capital appreciation, and minimal void periods.
6. Looking Ahead: 2025 and Beyond
The Hometrack forecast for the rest of the year remains cautiously optimistic:
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Sales volumes set to be 5% higher in 2025 than 2024
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UK-wide house price inflation expected to hit 2% for the year
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Modest but consistent gains in northern cities likely to continue
For investors, the goal isn’t just chasing short-term gains, it’s about sustainable returns, resilient demand, and long-term capital growth. With Liverpool, Newcastle and Manchester all showing upward trends in sales activity, house prices, and demand fundamentals, the time to invest is now.
Final Thoughts: Should You Invest in the North?
In a cooling national market, the North is heating up.
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Liverpool offers unbeatable value and dependable yields.
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Newcastle is the underdog with impressive upside.
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Manchester delivers scale, stability, and long-term vision.
For those looking to future-proof their portfolios, these cities offer the perfect balance of affordability, growth, and resilience. With national conditions favouring buyers and local dynamics supporting price inflation, 2025 is shaping up to be a strategic entry point.
Northern stars are rising; don’t miss your chance to invest before they hit their peak.
