Investing in Liverpool Property?
Globally renowned as the home of The Beatles, Liverpool FC and Everton FC, Liverpool is a former industrial city and docklands that has thrown off its post-industrial doldrums and reinvented itself as one of the UK’s star turns as a city. It’s subsequent renaissance, particularly over the past two decades, has been nothing short of spectacular and in many ways mirrors that of Glasgow, another thriving city that has gone through an almost identical resurgence. Tellingly, Investing in Liverpool and Glasgow took the top 2 spots in a recent analysis of the UK cities with the best buy-to-let yields including student accommodation.
A reinvention of the local economy, including a rebirth of the city’s port, investment in infrastructure and transport links and a youthful, dynamic population have all played their part in returning Liverpool as one of the UK’s favourite urban centres. We take a look at the key stats driving the city forward socially, economically and as a property investment destination now couldn’t be a better time investing in Liverpool.
With a population of just shy of half a million (484, 578 in 2016 according to city council stats), Liverpool is the UK’s 7th largest city. The wider Liverpool city region, including Warrington, Wirral, Flintshire and Chester has a population of around 2 million inhabitants and Merseyside metropolitan county is estimated at around 1.38 million. Manchester and Liverpool are also often considered as a polynuclear metropolitan area. The Manchester-Liverpool urban spread, though the Birmingham area also has a case, is generally considered to be the most populous area of the UK outside of Greater London.
From 2006 to 2016, the Liverpool City Region’s population grew by 2.9%. While still lagging the UK average, it’s an encouraging trajectory for an area that for a long time was in population decline. The city’s population is forecast to increase by 4.8% to 496,600 between 2014 and 2024. Liverpool is also a young city with 33.9% of the population under the age of 24 compared to a UK average of 30.7%. 25 to 44-year-olds also make up 28.3% of the population against a national average of 27.3%.
The city also has three universities and a large student population of 60,000 in 2016, more than the total population of Inverness, the capital of the Highlands. Student numbers leapt a huge 20% between 2015 and 2016.
Liverpool’s economy has boomed over the past two decades and now generates an annual economic output valued at more than £30 billion. The economy has grown by £2.5 billion over the last two years alone. At 4.3%, that’s stronger growth rate than Greater Manchester’s 3.3%. In 2015, the National Office for Statistics data showed that, at 3.1%, Merseyside had the best economic growth of any major city area in the UK, ahead of even London. The underlying theme when it comes to Liverpool’s economic landscape is that much has been achieved over the city’s recent history but there is still plenty of room for progress.
Infrastructure investment has been the main feature of Liverpool’s economic and social resurgence. An estimated £5 billion has been poured into the regeneration of central Liverpool over the past decade. The port and docks area, once the symbol of the city’s economic decline, has risen again and now represent much of what is good about the city. A new deep-water shipping port, Livepool2, forms part of the North-West’s SuperPort project, a £1 billion investment now underway. The new dock will be able to cater to the new generation of giant container ships and, together with surrounding logistics infrastructure, is aimed at creating a global freight hub for the north of the UK and Ireland. The Mersey approach channel is also being deepened to 16 metres to accommodate huge container ships arriving from the Far East via the newly widened Panama Canal. The expansion is forecast by Peel Group, the project’s lead investor, to lead to the direct creation of 5000 new jobs in the area.
The first stage in the regeneration of Liverpool also began at the docks in the 1980s with the Albert Dock’s abandoned warehouses converted into an entertainment and shopping hub that is also now home to the Tate Liverpool gallery. A new £19 million cruise liner terminal has also resulted in well over 100,000 passengers disembarking in Liverpool to shop and sightsee every year.
Other notable attributes that makes investing in Liverpool ever more compelling are the redevelopment projects such as the 42-acre Liverpool ONE complex, one of the UK’s largest open-air shopping centres that now occupies what was once wasteland in the heart of the city centre. The West Tower, an exclusive 40-storey skyscraper that is home to luxury apartments, Grade-A office space and a number of high-end restaurants is the most noticeable feature of Liverpool’s new skyline and symbolises the city’s new era.
International companies such as Deutsche Bank, Jaguar Land Rover and Unilever have all invested in the Liverpool region in recent years and last year Liverpool was home to the biggest proportion of fast-growing firms of anywhere in the UK. The number of Liverpool-based companies classified as ‘high growth’ has risen by 56% over the past 6 years.
Transport links are both a strength and bone of contention for Liverpool. An airport with direct flights to over 70 countries, 3 train stations and good road links are all in the city’s favour. A new £600 million Mersey crossing is also due to open this year. However, the city has voiced frustration that the proposed HS2 high-speed rail link connecting the North-West and London, due for completion in 2033, will stop 20 miles from the city. This means it will be on a slower route from London than both Manchester and Leeds and the local business and the city council are lobbying for a fast east-west rail link to Manchester to be built.
In 2016, unemployment in Liverpool still stood at 12%, twice the national average. One issue is that many of the new jobs being created in Liverpool require skill sets that not enough local residents hold and are being filled by commuters into the city. Just 27 per cent of Liverpool’s population is classed as “high skilled”, compared with 36 per cent nationally. Liverpool’s economic output in terms of GVA per capita is also still slightly below the UK average. However, while unemployment figures and economic output can be improved upon, Liverpool actually has among the highest average median weekly workplace incomes of the UK’s major cities. Only Bristol residents earn more.
Despite the growth and optimism, there is still plenty of room for improvement and the city has not yet reached its intended destination economically.
The Residential Property Market
One part of investing in Liverpool ’s economy in recent times that has shown to be a standout performer is the housing market. Stark improvement and impressive growth are apparent in almost every possible metric and the city regularly tops different buy-to-let indices for investment returns.
Over the six years between the beginning of the post-financial crisis recovery in 2009 and 2015, residential property sales in the city increased by 77%. According to the latest Zoopla data from August 2017, the average house price in Liverpool is currently £164, 829, up 1.05% in the three months since May. Apartments sold for an average £146, 028 and terraced houses for £105,756.
Hometrack data on the UK’s 20 biggest cities put Liverpool behind only Manchester for capital gains in the UK over the year between March 2016 and 2017, with house price growth of 6.5%. However, Liverpool’s residential property prices are still far behind the national average of £301,000, suggesting there is plenty of scope for future capital gains.
The biggest attraction of property investment in Liverpool is the rental yields that can be achieved. A recent study by mortgage brokers Private Finance put Liverpool at the top of their list of the best cities for a buy-to-let property. Average rental yields in the city are around 8% after taking into account mortgage costs. There couldn’t be a better time for investing in Liverpool.
Source: Private Finance/City A.M