Liverpool Experiencing Rush of Residential Property Investment

Written by: Cathal Leonard
May 6, 2016

The city’s prime stock is experiencing a particularly strong rush, thanks to the city attracting increasing levels of interest from high net worth investors who wish to invest for the longer term.

Major developments such as the phenomenally successful Chancery House are also helping to drive up sales. Over the first quarter of this year – the period covered by the latest City Residential report – activity also received a boost from investors hurrying to beat the increase in stamp duty which took effect in early March.

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It is not hard to see the appeal of the residential property market in Liverpool, as it is performing well and seems to be set for a bright future. According to the City Residential’s Q1 2016 report, prices in the sector experienced a quarterly rise of 1.24%, bringing them to a year-on-year increase of 3.98%. Letting prices performed more-or-less in line with purchase prices, with a quarterly increase of 0.99% and annual growth of 3.46%.

“Whilst some commentators believe that this level of growth is not particularly strong,” the report says, “we would suggest otherwise. Together with the steady and continual growth in capital values buy to let landlords/investors are continuing to experience a near perfect environment without the excessive volatility that has been seen in the past or may be happening in other cities.”

The report shows a strong lettings market in many ways that extend beyond simple price growth. There is a continuing lack of stock in comparison to demand from the city’s large and rising population. There are a number of new developments at various stages, from planning applications to nearly-complete buildings, and these serve to create new opportunities for investors without really being sufficient to change the stock shortage. Furthermore, the report shows that many of Liverpool’s tenants are keen to stay in their existing homes, so once a property has been filled the tenancy is more secure on average than in many other markets.

Regarding the type of properties that benefit most markedly from this situation, the report says: “With many of the existing and proposed developments targeted towards overseas investors or PRS funds there is a real gap in the market… for ‘proper residential stock’. Smart investors are waking up to this fact and trying to secure apartments in those few schemes that are being sold in a more normal manner which offer long term capital and rental growth.”

Though it is variably classified as either residential property or part of the commercial sector, student property also represents a major string in Liverpool’s bow and a big attraction to investors. Like most UK university cities, Liverpool currently has something of a shortage of student beds. Indeed, being home to multiple universities makes this problem arguably more significant in Liverpool than in many other locations. With student numbers still on the rise, new developments and new investment opportunities are appearing quite regularly in an effort to keep up.