Unlikely location heads landlords’ capital growth league table

An unlikely location heads the latest league table purporting to show the highest returns on property investment.

Aldermore’s Buy To let City Tracker names Southend as offering the strongest property investment returns in the past decade.

It says that with robust house price growth year-on-year, Southend saw the biggest average annual increase in house price of all 50 cities featured, with an average annual rise of 5.9 per cent compared to the national average of 4.4 per cent. It adds that this means the average property increased by £16,123 every year for the last 10 years.

Meanwhile, Luton also saw average annual house price growth of 5.9 per cent, while Bristol property owners saw an increase of 5.7 per cent.

But it admits that landlords may be unhappy because when it comes to short-term yields, these three cities performed notably worse, offering yields between 4.0 and 4.9 per cent.

Aldermore’s Tracker comprises of five core indicators: average rent per room per month, short-term yield for a new buy-to-let purchase, average property price rise over the last 10 years, proportion of vacant properties in the city and size of the private rental market. The index uses sources including the ONS, Census and other official housing statistics.

The top 10 cities for long term property returns in the last year are dotted across the country, with representation from several major regions. There’s a strong showing of five in the East (Southend, Luton, Cambridge, Basildon and Chelmsford), two in the East Midlands (Nottingham and Leicester), as well as one apiece in the North West (Manchester), South West (Bristol) and South East (Milton Keynes).

At the other end of the table, two Scottish cities featured in the bottom five for long term property returns, with Aberdeen (50) ranked as the worst city for the second year in a row, followed by Dundee (49). Rounding out the bottom five were two cities in the North East: Sunderland (48) and Newcastle (47) as well as Bradford (46) in Yorkshire.

Jon Cooper, head of mortgages at Aldermore, comments: “Over the past year, the housing market has seen major shifts that have affected people across the board, whether you’re a landlord, renter or homeowner. When combined with cost of living pressures and rising energy prices, landlords are naturally being forced to re-evaluate their portfolios. We recommend that all landlords work closely with their brokers to identify where the best returns are for their investments in 2023.” 

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