Complete 2023 Guide.

Liverpool
Property Investment

Liverpool Property Investment: Why Invest In 2023?

 

Thinking of making a property investment in Liverpool?

You’ve come to the right place.

This guide will show you EXACTLY why to invest in Liverpool in 2023.

Topics covered include:

  • A summary of the Liverpool property market in 2022.
  • The latest Liverpool house price data from the Land Registry.
  • Property price predictions for Liverpool.
  • Four reasons why investing in Liverpool is a good choice in 2023.

Keep reading to learn more about investing in this North West city:

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liverpool-area-guide

Why Invest In Liverpool?

So, is Liverpool a good place to invest in property?

With impressive rental yields at an affordable entry price, property investment in Liverpool ranks among the best in the UK.

Here are eight reasons to invest in Liverpool 2023:

The property market had an explosive year in 2021 with record-breaking levels of growth.

Despite pressures from both Covid-19 and Brexit, UK property prices surged past the £250k mark for the first time ever, with Nationwide reporting an average property price of £254,822 in December 2021.

But how did Liverpool perform over the last 12 months? Let’s look at the latest house price data and rental prices to see how Liverpool faired in 2021.

According to the latest Liverpool house price data from the Land Registry, the average Liverpool property price is now £171,221.

This is a whopping 17.90% higher than a year prior, after property prices in the city jumped by £25,999 since October 2020.

The growth seen in Liverpool over the last 12 months is actually the second highest out of the UK’s top 20 most populated cities, with only Sunderland seeing higher growth since 2020 according to Land Registry data.

Due to the price increase seen across the city, Liverpool house prices are now a whopping 44.99% higher than five years ago – almost double the UK average growth of 25.33%

Despite this huge growth, though, Liverpool house prices are still incredibly affordable, with the city ranked as the fifth most affordable out of the top 20 most populated UK locations. Only Stoke, Middlesbrough, Sunderland, and Glasgow have more affordable prices than Liverpool.

This is why property in Liverpool and property investment opportunities in this UK city are seen as such a hot commodity, with the capital growth potential on offer ideal for house flippers and long-term landlords.

While Liverpool’s capital growth potential makes the headlines, rental yields in the city are another strong reason to make a property investment in Liverpool.

Although the average rental income in the city is only £12,060 – a figure that pails in comparison to nearby Manchester’s £18,528 – the return potential seen in the city is incredibly high thanks to low house prices.

In fact, the average rental yield in Liverpool is 7.04% – the tenth highest in the UK. For comparison, the UK average is just 4.74%.

These high rental yields for buy to let property are supported by high rental demand seen across the city, with a whopping 16.3% of the population aged 20-29 – making both residential property and student investment property effective strategies for property investors in 2022.

Rent is on the rise throughout the UK, with the North West seeing some excellent growth over the last 12 months.

In fact, the average rental income in the North West is now 9.3% higher than one year ago, with predictions from Savills pointing towards a further national rent rise of 19.9% by 2026 in line with rising income.

Infrastructure and employment are the backbone of any city, with work opportunities typically the biggest draw for young professionals relocating to the city.

This is key for investors, as young professionals are one of the most popular age groups to rent, with statistics from the ONS showing that 25 to 34 year olds make up 35% of the UK private rented sector.

Thankfully, Liverpool offers some world-class employment potential.

In 2020, Liverpool city region was voted in the top 10 global locations for business start-ups alongside nearby Manchester.

The city is particularly strong for its tech business scene, with the Baltic Triangle area in Liverpool city centre host to some of the UK’s biggest digital employers.

A report from early 2020 found that Liverpool was in the top 10 UK locations for tech start-up businesses according to the Centre for Entrepreneurs.

A big factor behind the considerable capital growth on offer in Liverpool is the mass levels of regeneration seen across the city.

Through both government funding, private funding, and work from Liverpool city council, the Liverpool vision is one of the most exciting in the UK with a host of new developments focused on Liverpool city centre.

Liverpool Waters

Likely the headline project for the foreseeable future is Liverpool Waters, a £5.5 billion inner-city regeneration project set to revitalise Liverpool’s iconic docklands with five brand-new neighbourhoods.

Knowledge Quarter

The £2 billion Knowledge Quarter found in Liverpool city centre has already put the city on the global science map.

The region is a renowned cluster of science and education institutions, with the likes of the University of Liverpool and Liverpool John Moores University calling it home.

More interestingly is the incredible research ongoing in the Knowledge Quarter, with Liverpool School of Tropical Medicine, Liverpool Science Park, the National Oceanaographic Centre, and RedX Pharma all found within the area.

Work is still ongoing to improve the Knowledge Quarter even further, with projects including the £450 million rebuild of the Royal Liverpool University Hospital and the £1bn Paddington Village – the new home of the world-renowned Royal College of Physicians.

More Liverpool Regeneration On the Horizon

While the Knowledge Quarter and Liverpool Waters undoubtedly make the headlines thanks to the ambitious scope, there are tonnes of multi-million projects currently ongoing, or set to start in Liverpool.

These include:

  • A £500 million city-wide road improvement, including a pedestrainised make-over of the iconic Lime Street and The Strand.
  • An additional expansion of Anfield Stadium, that will see the creation of 7,000 new seats to the home of Liverpool football club.
  • The creation of 2,500 jobs with Ten Streets, a brand-new neighbourhood set to be built in Liverpool city centre.

ith regeneration in the Knowledge Quarter adding additional high-skill jobs to the city centre, more students than ever are descending onto Liverpool.

The city currently boasts a student population of over 70,000, with five world-class higher education facilities on offer leading to Liverpool ranked as the 22nd best student city in the world out of 200.

Significantly, a massive portion of these students are foreign, with Chinese students making up one in five students at the University of Liverpool.

This is crucial for anyone considering student property investments in Liverpool, with a Savills report finding that Chinese students are 2.2 times more likely to stay in purpose-built student accommodation than domestic students.

Liverpool also boasts the UK’s seventh highest graduate rate – outweighing the likes of Oxford and Cambridge – while also being the sixth most employable city for graduates in the UK.

With purpose-built student accommodation available below £100k in Liverpool, and with high rental yield often around 8% NET, it’s clear that those considering Liverpool properties could make an excellent investment with student property.

Liverpool Property Price Predictions 2023 & Beyond

2022 was clearly a great year for the Liverpool property market, but how will the city perform in 2023 and beyond?

Well, while there is no way to guarantee capital growth, we can use the latest predictions from industry experts to paint a picture of how the city could perform in the coming months – remember, though, that these are just estimations, with house prices known to perform incredibly differently, especially during times of uncertainty.

According to the latest predictions from Savills, the North West is set to have the joint-highest growth in the UK alongside Yorkshire and The Humber.

In 2022, Savills has predicted a 4.5% growth in the region, with an additional 4.0% rise expected in 2023.

These house price rises will continue for the three following years, increasing by 3.5% in 2024, 3.0% in 2025, and 2.5% in 2026, ultimately rising by 18.8% over a five-year period.

While house price growth predictions are useful for those looking at Liverpool property investment opportunities, the level of capital growth you can expect will depend on the property type and location.

For instance, those buying a residential home will likely see more capital growth than someone buying purpose-built student accommodation.

How Does Liverpool Compare to Other UK Cities? 

While Liverpool’s statistics look incredibly good on the surface, let’s add some context by comparing the Merseyside city to other top locations in the UK.

In a blog post, we unveiled the best places to invest in UK property by comparing capital growth potential, rental yields, and affordability across the UK’s top 20 most populated cities and areas.

Have a look below to see how the city ranked against other locations in the UK in the following three categories.

Capital Growth 

Liverpool came out on top in the capital growth category, finishing first out of 20 cities thanks to massive 12 month growth and considerable future growth predicted.

Affordability 

The Merseyside city once again appeared in the top five for our second metric, finishing as the fifth most affordable city, offering prices just over £171,000.

Rental Yields 

Although Liverpool wasn’t first for rental yields, it still managed to find itself on the table, ranked as the tenth best city for rental yields.

In fact, across each of these three categories, Liverpool was only one of two cities to appear in each category, alongside Glasgow.

Liverpool vs Manchester 

When considering a North West investment, there are likely two locations that come to mind; Liverpool and Manchester.

But which city comes out on top as the premier North West investment hotspot? Take a look at the data below.

As you can see, it’s a close match up between Liverpool and Manchester, with each city likely suited to different investors.

For recent capital growth, Liverpool comes out on top, which prices rising by almost 18% over the past year – almost 10% higher than Manchester.

However, Manchester wins in terms of long-term capital growth, showing a 77% rise in house prices over the past 10 years, while Liverpool offers a 58% increase.

So, which city should you pick?

Well, it simply depends on your budget and goals. Manchester offers much higher annual rent on average, but this comes at a premium, with Manchester property over £40k more expensive than Liverpool.

If you’re unable to afford this hike, then Liverpool seems like an ideal choice for those with smaller budgets looking to make sizeable capital growth returns.

Download 2023 Property Investment Guide

Best Buy to Let Areas in Liverpool 2023

According to our research, the best buy to let areas in Liverpool 2022 are Belle Vale, Dingle, Old Swan, and Toxteth.

This is because they offer average rental yields upwards of 10% thanks to incredibly low property prices far below the city average.

Belle Vale

  • Average House Price: £51,561
  • 5-year Price Growth: 25.51%
  • Average Rent (Annual): £8,160
  • Average Rental Yield: 15.83%

Old Swan

  • Average House Price: £117,221
  • 5-year Price Growth: 25.46%
  • Average Rent (Annual): £17,580
  • Average Rental Yield: 15.00%

Dingle

  • Average House Price: £101,295
  • 5-year Price Growth: 25.46%
  • Average Rent (Annual): £13,116
  • Average Rental Yield: 12.95%

Toxteth

  • Average House Price: £119,161
  • 5-year Price Growth: 25.46%
  • Average Rent (Annual): £14,880
  • Average Rental Yield: 12.49%

Kensington

  • Average House Price: £118,405
  • 5-year Price Growth: 25.46%
  • Average Rent (Annual): £12,648
  • Average Rental Yield: 10.68%

However, these findings have been heavily limited by sample size, with some areas only having a handful of properties available for data analysis.

For example, Liverpool city centre has far more available properties than Kensington. Although Liverpool city centre has “worse” statistics than Kensington, it doesn’t necessarily mean it’s a worse location due to the limitations of sample size.

As such, it’s a smart idea to take each of these results with a grain of salt, and to simply use this as a benchmark rather than a conclusion.

Instead, be sure to browse properties in these areas and assess the potential of the investment properties yourself for the best chance of success.

To get a full picture of investing in Liverpool, be sure to download our free guide to the ABCs of Liverpool property investment, where we show the data of each Liverpool suburb in alphabetical order.

Alternatively, check out our guide to buying buy to let in Liverpool for a more comprehensive look at the best buy to let areas in Liverpool.

Looking for more information on Liverpool property? View our complete guide.