The exponential growth of the London property market in the wake of the 2008 financial downturn has seen property investors face increasingly high house prices and smaller rental returns.
As the market in the capital continues to grow, many property investors are now turning to the north of England for alternatives. With some of the UK’s largest cities such as Manchester, Leeds and Sheffield offering the same city living as London, but with lower prices and higher rental returns, the North is becoming an increasingly attractive proposition for property investors looking for alternatives to the capital.
As with London, some of the best investment opportunities are to be found just outside of the city in some of the surrounding towns and cities.
The traditional South Yorkshire market town of Barnsley has become a target for many investors over the past few years, with the growth of its property market rivalling some the UK’s biggest cities. The wider metropolitan borough of Barnsley is home to more than 231,000 people, with 85,000 living in the town itself.
With Barnsley set to undergo a significant amount of regeneration, with work scheduled to begin early next year, discover the top 5 reasons to consider investing in Barnsley in 2016:
One of the biggest considerations for many property investors is the level of capital growth that can be achieved by any property that they decide to invest in. Since the financial downturn of 2008, many areas of the UK have seen a modest recovery with the majority of the growth experienced in the capital. However, some areas have seen extensive growth.
In 2013, it was revealed in a report from property listings site Zoopla that Barnsley experienced the fourth highest growth in house prices over the course of the year, rising by £9,851 on average and an increase of 8.7% - higher than property hotspots Cardiff, Glasgow and York.
Source: Zoopla, published by This is Money 12/12/2013
Barnsley has maintained the momentum of this growth, with the average house price increasing by 4.5% from December 2013 to December 2014 according to figures from the Land Registry.
Coinciding with Barnsley’s ongoing growth has been the regeneration of the town. Opened in 2007, the redeveloped Barnsley Interchange Transport Hub, housing the train and bus stations for the town, has brought the town more efficient transport, with routes more effectively served in the area.
2016 is set to bring the commencement of Barnsley’s next big redevelopment project, with attentions turning to the town centre itself. More than £50 million has been allocated to the regeneration, with the first phase, the introduction of a new covered market, set to begin early next year.
The scheme is set to transform and revitalise the heart of Barnsley, with the addition of a new market square, the extension and refurbishment of the town’s market, a new 3,000sqm public library, a cinema, shops and offices all planned.
The Northern Powerhouse is a government initiative to bring a greater balance to the UK economy with greater investment in the North and the provision of devolved powers to key regions so that they can self-govern and allocate resources in a way that best benefits those areas.
As the UK’s third and fourth largest cities, Leeds and Sheffield are central to this initiative, with both areas set to receive large portions of the planned £13 billion investment in the North.
Located 17 miles south of Leeds and 12 miles north of Sheffield, Barnsley is perfectly located between the two and has become a commuter haven in recent years as both cities have continued to grow as commercial, financial and retail centres.
With transport links connecting Barnsley to these city centres now more efficient than ever before due to the regeneration of Barnsley Interchange, the market town is likely to generate more interest from young professionals and commuters.
The latest figures published by the Office for National Statistics (ONS) in October suggest that the average UK house price has reached £282,000, with Barnsley’s property prices remaining well below this average.
According to property listings site Rightmove, the average house price in Barnsley is currently £121,957 as of September, remaining similar to last year’s figures but still 6% lower than the 2007 peak of £129,302, demonstrating the growth potential that stands within the Barnsley market.
As a result of lower property prices, buy-to-let property investments in Barnsley tend to offer higher rental returns for property investors. For example, Studio 8 at Regent House is able to offer purchasers a NET rental return of 9% less ground rent and Oakwell Vale also provides 8.50% gross for buyers.
This stands in contrast to the much lower yields available in Central London, where investors often pay much higher prices, with the average London property price standing at £493,026, for properties that offer average rental returns of 2.8% according to figures from Knight Frank.
The affordability of property in Barnsley has made it a popular market for both property investors and private rental tenants looking to stay in the town.
According to a 2008 report from Affordability Research Committees (arc), the level of those in private rental accommodation was 185.5% higher than the average Barnsley mean value.
Since 2008, rental demand has risen across the UK as the housing market has continued to grow, meaning many are turning to the private rental market as opposed to purchasing a property.
As with most UK towns and cities, this has led to an undersupply of private rented accommodation in Barnsley, representing an excellent opportunity for property investors to capitalise in the buy-to-let market.