The keen property investor is always on the lookout for ways to maximise both their budget and their yield. With house prices in the UK on the rise and inflation putting the squeeze on even the widest of pockets, many people are now looking for hidden-gem locations, where the ideal investment opportunity is still available at achievable prices without sacrificing either returns or capital growth.
In this article, we are going to be diving into Preston; a city that could potentially be the next property investment hotspot in the UK. We will take a look at Preston’s statistics, investment fundamentals and the factors at play that point to this lesser-known historic city becoming one of the biggest players in property investment over the coming years.
Where is Preston?
Preston is located in the county of Lancashire in the North West of England. With an excellent economic status, Lancashire generates around £28 billion in revenue every year. Within Lancashire, you will find Preston sitting within close proximity to both Manchester and Liverpool, taking an average of 50 minutes to reach either by car. Follow upwards from Preston on the map and you will soon find yourself in the Lake District, one of the UK’s most beautiful national parks spanning over 912 square miles. 2022 is the third consecutive year of Preston being named as the Northwest’s ‘Number One City to Live and Work’ by PWC. This demonstrates Preston’s excellent standard of living that is attracting high-quality tenants who intend to stay.
Exceptional Capital Growth
Liverpool and Manchester are both cities that people are familiar with within the property investment market as they have had a lot of attention over the years due to their very aggressive capital and rental growth performances. Data recently published by the HomeTrack House City Index reveals that Preston’s average capital growth is now 8.4%, which is up from 4.8% last year. This explosion of capital growth is incredibly close to rivalling the likes of Liverpool and Manchester, which are typically in the high eights, nines and tens. The combination of low entry-level pricing and a good level of sustained capital growth makes Preston a very appealing prospect for investors. Thinking long-term, prices are also set to increase more rapidly in the Northwest than anywhere else in the country over the coming years, with Manchester and Liverpool being huge drivers of growth for the entire region. As such, cities in close proximity to these are likely to see the most significant impact on property values. As the region’s third-largest city in the region, Preston too will become a force to be reckoned with. We expect property investors to benefit massively from investing in the city while prices are still highly competitive.
Low Entry Point Prices
Investors seeking to minimize their risk or minimize their capital outlay are often on the hunt for affordable investment locations. As prices increase in popular investment areas such as Manchester and Birmingham, rising upwards of £250,000 to £350,000, investors with a lower capital to put down risk being priced out of the market or having their portfolio expansion curbed prematurely. In comparison, the average price in Preston is currently just £168,500. For reference, the average price for a property in UK’s capital now sits at over half a million pounds. This presents a vivid picture of what makes Preston such an attractive prospect for those seeking to enter the property market for the first time or maximise their budget. Purchasing a high-quality property for under £170,000 presents investors with a very strong opportunity, especially with the expert predictions of Preston’s growth continuing at its current rate over the next decade.
High Percentage Yield
Preston is also a star player when it comes to percentage yield. There is research that is suggesting that by investing in Preston, you can achieve the best returns in the UK. Recently, Quarters took the average property price in every UK city, calculated the likely mortgage costs and then compared it to every city’s potential income based on their average rental prices. The result of this cross-referencing of data was that Preston offered the best return on investment of any UK city, with potential profits of more than £5,000 pounds per year. This is an incredibly strong average return. Preston has experienced over 10.6% rental growth in the last 12 months alone. The current lack of supply in the city is anticipated to drive further demand and continue to push up rental prices, growing rental yield over the long term.
The Spark of Regeneration
The next fundamental to look at when sourcing an investment location is regeneration. In 2019, Preston was awarded £20.9 million from the Towns Fund, which is a £3.6 billion government initiative for towns and cities across the UK. Preston will be using these allocated funds as part of the city’s 15-year city investment plan which will be going on between 2020 and 2035. The regeneration plans will improve Preston’s cultural and leisure infrastructure, and the opening of a new commercial district will provide a strong boost to the economy. Investing at this early stage will allow buyers to capitalise on the increase of the city’s social and business infrastructure by £1 billion over the next 10 years.
The Stoneygate Masterplan aims to construct a new urban village on the city’s fringes. It will transform many major areas into popular and trendy destinations.
The goal of this project is to construct a modern European-style neighbourhood, with popular restaurants, bars and traditional market stores. There will also be a modern movie theatre and plenty of other local amenities and attractions. This will be a lively and fun place to live, work and play, attracting new residents to the area. All this is excellent news for any investor because these plans will create new jobs, more business and more demand for city-centre property.
Preston is now the fastest-growing technology city, with a 53% increase in digital jobs between 2018 to 2020. This is a strong industry with major growth ahead of it and is guaranteed to offer a great deal of commerce and opportunity as time goes by. Other major employers are also established in the city, such as the NHS and the University of Central Lancashire. Preston has also been announced as the location of the government’s new Cyber Force HQ. This will provide huge benefits for the local economy for years to come, drawing thousands of highly skilled workers and expertise to the Northwest. The attraction of young professionals, new talent and executive students will inevitably increase Preston’s already strong demand for high-spec rentals near the city centre.
Preston Investment Summary
The deciding factors determining the success of any property investment strategy are affordability, location and return on investment. Preston is a rare city to check all three boxes and the data backs this up. If you are interested in learning more about the potential of this city and exploring brand new, not-on-the-market development options in the area, Contact Us Today.