For those in the know, these cities are typically the most obvious ones to consider when considering property investment for the first time.
What if, however, there was an alternative?
A scrappy little underdog that – after years of solid growth, affordable house prices, and a developing reputation as the ideal commuting location – has the potential to play with the big boys and, maybe, one day even surpass them?
Now, it may not be the most obvious choice, but Luton might just be the next hotspot for investors to consider.
1. HOUSE PRICE GROWTH
It’s been an odd year. While it may have been assumed that the UK property market, like many other sectors of the economy, would be impacted by the turbulent effects of the pandemic, it has, in fact, seen a more optimistic outcome.
Despite various experts predicting dire consequences, 2020 saw record-breaking rises for the housing market, showing no signs of slowing down.
This December, it was predicted that house price growth would increase by around 4% in 2021, referring to the aftermath of the lockdowns as a motivating factor for prospective buyers. The idea being that having spent most of their time stuck inside last year, UK homeowners will be desperate to move to more extensive accommodation, a trend that will, hopefully, easily “outweigh” any uncertainties.
A similar effect is expected to continue across the coming five years. Savills predicts UK property will continue to rise in price by 21.1%, meaning the average house will rise from £230,920 to £279,644. More specifically, there’s expected to be a 17% increase in house values over the next four years in the Luton region. Basically, if you buy a property in Luton in 2021, you could potentially see a capital growth rate of 17% by 2025.
An impressive number, of course, but is it too good to be true?
Between 2016 and 2018, Luton also displayed a similar percentage increase of 17.2%, with house prices rising to a colossal £35,587. However, these prices fell significantly until this year where, as previously stated, they began to rise once.
According to RWInvest, it seems that the slump of economic uncertainty in the housing market could be behind us – citing the fact that Luton house prices have comfortably risen by almost 5% since the UK exited its first lockdown. With all this in mind, it seems that Luton’s house price forecast is seemingly accurate. All of this, then, could mean some impressive capital growth potential for investors.
With a population of approximately 218,045 in 2019 and a location around 20 minutes from London, Luton is widely known as a top location for commuters– a reputation that the town was able to efficiently capitalise on, using this popularity to develop various business and technology hubs.
Developments like Butterfield Technology Park (an 85-acre parkland which sits beside the city’s Innovation Centre and Business Base), for example, houses over 100 small-business units and boasts its continuing ability to attract high-quality investors and tenants with its impressive links by air, rail, and road, as well as its top-tier accessibility.
London – the cousin next door – also has a widely known reputation. Unlike Luton, however, the city’s infamy for high costs often outshines whatever people have to say about commuting links. With both average families and investors alike constantly struggling to climb the ladder, London property could seem like a continuing uphill battle to break into.
With its close links to the city, Luton appears to be a fascinating alternative. According to Rightmove, property prices in Luton have increased by 7% over the past year, with the overall average being around £290,200. Considering the area, with the average southern property valued at £345,075 and the UK average house price currently estimated at £250,341, most would agree that you’re not going to find prices as low as this, especially if you’re looking at property close to London.
3. RAPID INCREASE IN POPULATION AND POPULARITY
The UK’s population is predicted to reach around 74 million people in the next 20 years. With more people bouncing around, there’s a greater need for properties to house them. Simply, it’s clear that there is an ever-growing call for more housing within the market. Luton, once more, displays this perfectly. Like the rest of the planet, the population in Luton has also been steadily increasing, with more and more deciding to live and work there. In 2017, there was an estimated population of around 215,000. Fast-forward to now, and this number is almost close to being 220,000.
While you could say calling the town the next top ‘investment hotspot’ is a solid example of hyperbole, it cannot be denied that its attractiveness is on the rise. In fact, some could even say this growth was apparent even before this year’s price growth prediction.
For three consecutive years, between 2016 and 2018, Luton was voted the best buy-to-let location, according to the LendInvest buy to let index, which ranks 105 postcodes on factors like capital growth, sales, yields, and rental price increases. And, at the end of 2020, a news report found that Luton housing was the number one location for first-time buyers due to its affordable prices.
Yes, some people were into Luton before it was cool.
4. REGENERATION IN THE UK
As previously established, London prices have rapidly increased over the past decade, and as a result, investors have started to look beyond the capital city for more promising ventures. Regeneration efforts are notably attractive due to their ability to impact public opinion directly, demand, and in turn, property prices. Contributing to its price growth, the wealth of regeneration on offer in Luton is particularly prominent.
The biggest – and perhaps, obvious – attraction is the London Luton Airport. With over 18million visitors per year, the airport employs over 9000 people and supports a further 17000 jobs. Since 2014, major redevelopment has been underway to transform further and support its growth.
Costing around £140million, these improvements have included a redesign of the terminal, doubling their retail space in the process, introducing a 1700-space car park, and expanding the range of routes and airlines on offer. With more work still to come, it’s estimated that economic impact will increase from £1bn to around £2bn, alongside a further 10,000 jobs created by 2030.
While maybe not the first choice of many, it’s not difficult to see why Luton is quickly becoming increasingly popular with investors and first-time buyers alike. With demand for UK property, in general, being particularly rife and, with no hint of stagnation on the horizon, this could be the perfect time to get stuck in and start investing.