Useful information about investment property in Liverpool

If you are looking into investment property in Liverpool, you are certain to have been drawn into a conversation at some point over the state of the UK and Liverpool housing markets. With property prices at an all-time high, is it wise buy an investment property in Liverpool or should you buy elsewhere? With interest rates rising, what financial returns can a buy-to-let property provide? And, most discussed of all, is the bubble about to burst, turning your ‘pension fund’ property into negative equity?

We can’t read the future, but we can get in touch with industry analysts to find out what they think. With Liverpool’s strong position in both the student and professional markets and the city benefitting from major investment as a result of the 2008 Capital of Culture status, property investment in Liverpool is still a clever choice.

1. National slowdown causes concern but Northern cities stay strong in late 2007
The property market experienced a slowdown in the final quarter of 2007 with annual percentage changes in house prices falling to an average of 0.5% in December. However, all of the Northern regions of the UK saw an acceleration in house price growth during the last three months of the year. (Fionnuala Earley, Nationwide)

House Price Growth 2007
Location % change 2007 Price in 2007 Q4 Price in 2006 Q4 £ Change per day Ranking by price 2007 Ranking by price 2006
Birmingham 1% £179,726 £177,310 £7 23 23
Coventry 5% £173,626 £164,777 £24 27 26
Leeds 2% £195,521 £191,012 £12 19 17
Liverpool 3% £157,632 £153,528 £11 £29 30
Manchester 4% £206,181 £198,620 £21 16 15
Sheffield 1% £181,630 £179,883 £5 22 22
London 16% £329,007 £283,554 £125 3 3
Table showing house price growth in UK towns and cities in 2007. Source: Nationwide.

2) Liverpool forecast to beat 2008 housing slump
Research from the Halifax suggests that Liverpool will be one of ten towns to buck the downward trend in the 2008 housing market.
Substantial investment in the city in advance of Liverpool’s year as European Capital of Culture in 2008 has led to an increased demand for property. This should keep Liverpool house prices rising, even if other locations around the country experience the fall of up to 3% predicted by economist Howard Archer for Global Insight.

3) Seller’s market may weaken in 2008
Following the American sub-prime mortgage crisis and its effect on Northern Rock Building Society, it is expected that the market will continue to show slower growth than in early 2007 during the first months of 2008; however, Nationwide’s, chief economist, Fionnuala Earley, believes that ‘lower interest rates will probably help market activity recover somewhat later in 2008, as lower house price growth restores some affordability and allows pent-up demand from first-time buyers to be released”. Though the market may not recover its earlier energy, it is expected that 2008 will see the market more stable than earlier in the year.

4) Rental market at strongest levels in 5 years
According to the Association of Residential Letting Agents, national tenant demand is at its highest level in five years. While house prices have risen twice as quickly as earnings since 1990, leaving mortgage costs in mid 2007 at 32.5% of first-time buyers’ household income, rental costs have continued to rise in line with earnings (Hometrack) meaning that the rental market stands to attract more tenants if the predicted credit squeeze of 2008 sees a drop in first time buyers. The strong student and young professional populations of Manchester and Liverpool also keep the rental market buoyant.

Young professionals and students population 2005-06. Gross investment yields Q3 2007

5) Residential properties remain strong investment in Liverpool city centre
Investors continue to be drawn to Liverpool as the trend for strong investment at the higher end of the market for city centre apartments continues. While lower-specification one and two bedroom apartments are experiencing a slowdown in price rises, high specification developments continue to attract investors looking to take advantage of the buoyant rental market in Liverpool.

6) The gap in the UK Housing Market means property should remain a long-term investment.
Despite the government having raised the annual medium-term house building target in England to 240,000 in an effort to reduce affordability constraints, there is much skepticism over whether these targets are achievable. The gap between supply and demand means that despite the current slowdown in house price rises, properties should still remain a good long-term investment for the future.

House building shortfall estimates, Nationwide.

Property for sale in Liverpool