Which is the UK city with more potential for a property investment, London or Manchester Why do you think that is the case?

Answer 1

There are pros and cons to both areas when it comes to choosing which city to invest in and you really need to know what your main drivers are for investing in the first place before you can begin the decision-making process.

The most obvious difference is the amount of capital you will personally require to purchase in London compared to basically anywhere in the North of England. With average house prices in London hovering close to the £700,000 mark, you had better have either some pretty deep pockets or some very nice investor friends!

Compare this to the average house prices in Manchester of around £180,000 and it’s no wonder so many investors choose to head North. If this single factor has not already made your mind up, then your next biggest consideration is what is most important to you, cash flow or capital growth?

Generally speaking these two outcomes need to be traded off against each other as you rarely get to experience both benefits. In London your monthly yields will usually be terribly low due to the huge purchase price vs the amount of achievable rent, so don’t expect to retire off of your monthly cashflow alone. However, if for example you adore your job and you are only parking your savings into an investment property for a future nest egg, then capital growth may be all you are worried about. London on average sees much larger long-term capital growth than the North of the England although it also experiences larger hits when the market shifts. No one knows what the future will bring so banking on guaranteed capital growth is always a dangerous game.

If, however, like me, you are more concerned with higher monthly cashflow to allow you to spend more time living than working then cheaper and well placed terraced properties in and around the Manchester area can offer some of the highest yields currently on offer in the country.

There are various reasons contributing for the current surge of interest Manchester is seeing, but one of the biggest reasons for upward pressure on rents is the huge influx of employees major companies are bringing with them as they search for cheaper commercial space to base their head offices. Examples of these would be the BBC, Royal Bank of Scotland, Kellogg’s, The Co-op Group and Adidas.

Above everything else the most important point I can stress is to make sure you have an end game in mind before starting your investing career. If you do not know where you are going, then how do you know how to get there? Once you have worked out your vision, everything else will make a lot more sense.