Coolest Postcodes: The Next Big Thing in Property
If you’re interested in investing in the property market, you’ll probably want to know what are the coolest postcodes for 2023. In the UK, there are a range of regional markets with postcodes that can be a great place to invest. And therefore deliver strong returns both in terms of rental yields and capital gains.
In this article, we look into the best locations for investment in the UK property market. As well as what to look for in your property and the areas that are topping the list for coolest postcodes in 2023.
What do we Mean by Coolest Postcodes?
When considering the best or coolest places to invest in property in the UK, there are a number of key factors that make some areas stand out from the rest. Likewise, when considering any buy-to-let investment, it’s a good idea to look at key metrics. Such as rental yields, property prices and affordability, demand, regeneration and career opportunities, transport links and amenities.
As well as when it comes to buying an investment property. Having a complete picture of the buy-to-let’s location is an important factor. Taking a range of metrics into account will also allow you to consider under-the-radar areas or towns and cities that may not be traditional investment options but offer great potential.
Taking into account these criteria, we have highlighted several key cities and towns with the coolest postcodes. Including both traditionally popular emerging locations that offer attractive returns.
Is 2023 a Good Year to Invest in Property?
Towards the end of 2022, the UK property market has experienced a slowing down after record high property prices in 2021. Annual house price growth dipped to 11.5% in August, showing evidence of a slowdown. Although not moving as fast as the previous year, with expected interest rate rises, many property markets across the country are seeing a slight uplift as buyers try to pin down mortgages.
On the whole, the demand for housing in the UK exceeds supply. This has helped to keep the market in a state of activity. Rents continue to be on the rise, too. Meaning 2023 can be a good year to invest in property, especially for those interested in buy-to-let.
What Makes a Good Investment Property to Buy?
If you’re looking for a good property to buy for investment, ideally you want one that will pay off down the line. Here are a few factors that investors should pay close attention to.
- Low Property Prices and High Demand
An investor wants to make sure that the property costs less to operate than it brings in in rent each month. Rental yield is the rent an investor will make on a property on an annual basis. Rental yield is calculated as a percentage. Divide the rental income by the price paid for the property then times by 10. Read more about rental yield in this article
Landlords should keep an eye on the number of listings in an area. If there’s a lot of competition, it may take you longer to find a tenant for your property. You can help it to attract tenants by ensuring it has sought-after amenities. As well as features that are in demand like spare rooms or outside space.
- Strong Demand
Having an empty rental property is something all landlords want to avoid. Landlords will still have the mortgage and bills to pay so it’s important to keep a tenant in the property and avoid vacant periods. You can do this by enduring the area is in high demand for renters. Locations with a large number of students or economic growth and employment opportunities will usually mean it’s in demand. Find out how to spot an up-and-coming area in this article.
Narrowing Down to Your Investment
Narrowing down your property search to sought-after cities will allow you to locate the top-performing postcodes. Most importantly, for the best potential yields in the short term. As well as one that will also appreciate in value over time. However, appreciation will not affect every area of a city equally. Once you’ve identified a general location for purchasing an investment property you need to take a closer look at in-demand postcodes.
What are the Most Sought after Postcodes UK?
When you begin your search for an investment property, a good place to start is cities that are already hotspots. Or those up-and-coming. With so many factors affecting the viability of an investment, you can then narrow down your search to specific areas or postcodes. For example, while Manchester offers plenty of good investment opportunities, specific postcodes are higher performing than others.
Let’s take a look at some of the areas that are presenting good opportunities for investors.
Birmingham remains a good place to invest and is home to some of the coolest postcodes. Since 2016, the UK’s second city has been found on many of the best places to invest lists.
Hosting the 2022 Commonwealth Games placed the city further in the spotlight and incoming investment – both in the run-up to the games and beyond – ensures the city remains attractive for buyers, renters and investors.
The Big City Plan continues to revolutionise the city helping to boost house price rises which are forecasted for price growth of £50,000 over the next four years. Over the last decade, rents have increased 30% and are expected to continue to increase a further 12% over the next 5 years.
Rising rents are driven by an influx of young professionals and the 100,000 workers that make the city the largest professional hub outside of London. At the same time, 40% of the population is under 25, a huge rental demographic that is likely to be seeking rental property giving landlords a reliable stream of tenants.
With a high average income to house price ratio, Birmingham remains affordable and with travel time to London in just 49 minutes, the city centre remains a popular and highly-sought after destination.
Birmingham’s Coolest Postcodes 2023
With development projects like The Big City plan and Paradise Development, apartments in the city centre B1 postcode can be a lucrative investment. Average property prices are around
£205,545 and yields of around 6%.
In Digbeth, the city’s creative centre, young professionals flock to the area as an alternative to more expensive locations like the Jewellery Quarter. Digbeth is in close proximity to the main shopping areas and the city’s emerging Creative Quarter and gives easy access to Curzon Street Station. Asking prices in the area have increased nearly 40% since 2018 and yields are around 5% on average.
North of the city centre, Aston has some of the city’s cheapest property up for grabs – on average selling for £153,500. Home to a strong student population thanks to Aston University, this area can be attractive to landlords looking to make the most of higher rental rates of student housing.
Just a few minutes from the city centre, properties in Nechells had an average price of £135,625 in 2021 according to Rightmove. Cheap property prices mean this postcode has some of the highest average yields in the city at around 11%.
In the last few years, Manchester has become one of the UK’s most exciting investment destinations. Manchester has presented investors with some of the best capital gains over the past five years. Andit also led the charge for house price growth in the North.
With a rapidly growing population and economy, and plenty of incoming investment, Manchester has attracted more young professionals and continues to be a sought-after city for students. Further growth shows these trends are set to stay. For young professionals, Manchester has emerged as a popular alternative to London, with growing career opportunities.
Home to some of the UK’s best and most sought-after universities, Manchester boasts a buoyant student rental market. In the lettings sector, Manchester is a good alternative to London and property prices are expected to rise close to 28% by 2025.
Manchester’s Best Postcodes 2023
More than 5,000 people move into the city centre each year and the population is set to reach over 100,000 by 2025. Currently, the city centre suffers a lack of housing to meet demand, particularly flats, which pushes up rent, house prices and yields, which currently sit at an average of 7%.
Regeneration projects like Salford Quays and MediaCityUK are located close by to Salford, boosting its popularity. A stone’s throw from the city centre and the location of the University of Salford, the area is popular with students making it an attractive buy-to-let area. The average price of flats in Salford £200,000 and average yields sit at around 7%.
Popular with families and commuters heading into work in the city, Stockport is about 7 miles from the centre. Property is highly sought after and the area offers yields of around 6% on average.
Nottingham catches the eye of property investors because of its affordability compared to other major cities like Manchester and Birmingham. Offering high-quality yields of 9% in some postcodes, properties in the city have delivered well-performing capital growth and offer strong future long-term prospects, some of which are among the best in the country.
Home to two major UK universities, Nottingham has huge student tenant demand. The city is also home to a growing population of young professionals thanks to a growing Creative Quarter.
Nottingham’s Coolest Postcodes 2023
- NG1 and NG7
The city centre NG1 postcode as well as NG7 postcode offer yields of around 9%. NG7 took a dip during the lockdown to 6%, however this is expected to recover with students returning to in-person classes.
The residential and commercial centre of Beeston is popular withfamilies. This is thanks to its proximity to the M1 and 10-minute train link to the city centre. With a diverse range of properties, average yields in the Beeston area sit at 6.6%.
West Bridgford is located in South Nottinghamshire, with convenient access to the city thanks to cycle and bus routes. With independent shops and plenty of restaurants, average prices are some of the highest in Nottingham and while yields are lower than other areas at 4.8%, it makes a strong option for those seeking capital gains growth.
As Nottingham continues to undergo economic redevelopment, property in the area is catching the eye of investors. Attractive locations such as the Creative Quarter and Park Estate will remain popular with young professionals. NG3 is also an ideal location for students attending Nottingham Trent University, providing investors with a sustainable rental market.
Leeds has topped the list for the best place to invest in property in the UK for the past few years. With good yields, strong rental demand and strong capital gains prospects, Leeds is a key city for those seeking good property investment opportunities UK.
Over 70% of Leeds’ 800,000 population is currently renting. Home to several key UK universities, there is also a strong student market driving consistent demand. While capital growth is lower than in some other cities, the market is staying buoyant. All thanks to demand and a growing population.
Similar to Manchester and Birmingham, more people are flocking to Leeds from London thanks to job opportunities and its title as one of the UK’s fastest-growing economic cities. Home of the UK’s second-largest banking and finance sector, Leeds is attracting professionals in these industries which is driving rental demand.
Coolest Postcodes in 2023 in Leeds
– LS1 and LS2
Leeds city centre postcodes of LS2 and LS1 both offer yields of around 7%. Offering convenient transport and great amenities thanks to regeneration projects over the years, property in Leeds city centre is popular with young professionals.
Just 2 miles from the city centre, Headingly is a popular student area and self-contained suburb with shops, restaurants and bars. Away from the hustle and bustle, it’s home to plenty of student accommodation. Well served by public transport, yields of around 7% can be found for both flats and houses.
In terms of investment potential, those interested in property would do well to look to Sheffield. In 2022, we saw Sheffield begin to capitalise on the potential of its property market in terms of delivering rental yields to investors.
Sheffield is becoming an increasingly attractive city thanks to incoming investment and the growing appeal of the North as a whole. £480 million is being spent on the development of Sheffield’s shopping district, and the local authority continues to create amenities to meet rising demand. These developments arehaving a knock-on effect in terms of rental yields and capital gains.
Average property prices in Sheffield are currently around £215,000. The city is highly affordable which is also good news for landlords as there could be room to increase rents over the coming years if wages rise. Tenant demand continues at a strong rate which helps to keep rents and yields up.
Sheffield’s Coolest Postcodes 2023
In Sheffield’s city centre, The Heart of the City regeneration project – currently 50% completed – will transform the centre of Sheffield and make Fargate a future community hub. Properties in the city centre achieve the best rental yields – 7% – due to the high demand for city-centre living.
Sheffield’s economic plan aims for a growth in population of 70,000 before 2025, meaning demand for housing continues to grow. Located next to the centre, the S3 postcode in the North of the city offers as yields of around 6% making it a good return on investment.
Where are the Most House Sales in the UK?
The rising house prices of the last couple of years, alongside the Covid pandemic, has created a ripple effect in the property market. Particularly when it comes to where people want to live and the types of property they are interested in. House sales are being impacted by a few key trends:
- Escape the City
Rising house prices in London already squeezed out many buyers. Lockdowns and the subsequent work-from-home or more flexible working arrangements have given a boost to the trend. Subsequently more city dwellers are escaping the city in search of houses with more space away from the hustle and bustle.
- Head to the Coast
Coastal towns and cities are becoming increasingly popular, particularly hotspots like Newquay, Cornwall and Brixham, Devon. According to Rightmove, in 2021, Cornwall became the site’s most searched-for location, knocking London off the top spot.
In 2022, the Welsh coast was among the most popular areas. Namely, from the Gower Peninsular and Pembrokeshire to Aberdovey and Borth, as people seek better value for money. Locations in Suffolk and Norfolk are also set to come into their own. Especially as people look for the next up-and-coming property areas UK.
- Searching Further Afield
While we saw a lot of buyers flock to the countryside, buyers still search for locations where they can be part of a community and that are not too remote. Hotspots in rural areas will be places like villages where people can still feel part of a wider community.
- Gardens and More Space
The priorities of buyers have shifted. Now they are looking for new configurations of space to accommodate several members of the family working from home. Gardens are also in high demand. Houses to invest in are those with extra rooms for office space or a large amount of outside space.
- Commuter Towns
Commuter towns like Luton, Oxford, Cambridge and Sevenoaks are in high demand. Especially now as people move out of the city but stay within commuting distance for work. Commuter towns can offer landlords sought-after homes for investment. Lucrative returns as well if they choose the right property.
When it comes to the coolest postcodes for 2023, investors should look at towns and cities that offer potential. Then narrow down their search to the high growth postcodes. Attractive yields and capital growth prospects can be found across the country. As well as up-and-coming areas that offer more remote living. But ones that still maintain a sense of community can be highly popular among buyers and renters. To find out more about investing in property, get in touch with our experts today.