London vs York – which is the better property investment?

This is one topic I’ve been looking forward to investigating for some time.  I’ve had the privilege of working in both property markets and there is a clear dichotomy between York and London property.  One could argue that London has its very own property market to the rest of the UK. Property prices have risen exponentially and property in London has seen some incredible capital appreciation over other areas.  It was around this time 10 years ago where property prices started to recover from the credit crunch, so what better time to compare two property markets I’ve worked in and assess which area has performed better over the last decade.

Before I continue, we must bear in mind, there have been 32,366 property sales in York over the last decade as opposed to London with its rather staggering 993,703.  Well as at May 2009, according to Land Registry data, the average property in London would set you back £249,991 whereas in York, at the time, the average property in York would have cost £169,832.

Fast forward 10 years and according to Land Reg, in May 2019, the average London property now costs £457,471 and in York £255,768.  As such, London has rather expectedly seen a far greater uplift in property prices of 82.99% whereas York has only seen a 50.60% capital growth over the last 10 years.

Average Property Prices - London vs York

Whilst London has outperformed York over the last decade, over the last year, there has been an entirely different story where London prices have fallen by 4.39% in the last twelve months whereas York has seen capital growth of 2.81%.

Again unsurprisingly, over the last year, 20.20% of London properties were bought with cash versus 32.58% of York properties, from which we can surmise that property in York is more affordable.  So, what is the root cause of property prices rising in one area and falling in another?  Well quite simply, I would expect this to be largely attributable to market sentiment and profitability being squeezed out of the market and sector.

Let’s take the London versus York debate.  As a landlord investor, as at today, if you are faced with the choice of buying a London property for £457,471, the Stamp Duty alone is £26,597.  The Stamp duty for a £255,768 York buy to let property is £10,461.  This has an enormous impact on an investors bottom line and consequently may be a determinant on investment, be it foreign or local moving further north to areas such as Manchester, Liverpool, Leeds and York.  Whilst rents are fairly higher than that of other areas in the UK, invariably, as property prices rise, yields fall making property investment less lucrative in those areas.

buy sell clock

From regularly reviewing Land Registry data, I’m of the mindset that York prices still haven’t hit their crescendo and I expect to see prices to continue to rise and the reason for this?  I’m going to drop the ‘F’ word here… Fundamentals.  Outside of London, York is a fantastic place to live, work, visit and invest in.

As profitability is squeezed out of the buy to let sector, mainly by increasing levels of government intervention, seasoned York landlords will find a way to make their assets work for them, whether it be buying as a property as a limited company, gifting the property to a spouse or converting the property to holiday let so as to overcome the mortgage interest relief debacle.

For those landlords who would rather put the management of their portfolios in the hands of a reliable agent, why don’t you give me a call and let me see if I can help.

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