Where to invest for long term equity growth

When considering investing in property, an important factor to consider is the prospects of it increasing in value over time.

Whilst we’ve seen some interesting trends in housing prices over the last 20 years, the pockets of growth in different postcodes are notoriously difficult to predict.

However, some factors which will almost definitely attract a growth in property prices include investments in infrastructure, major transport links and lifestyle attractions. For example, the new HS2 Northern link and the Crossrail service expansions are bound to attract an increase in demand and therefore an increase in value of a property.

The same applies to areas with significant investment in major infrastructure. Cities with popular universities will have a lot of demand and likely will also have growth in infrastructure to cater for the young population.

Despite the unpredictability of house and area growth, to get a good return, it’s still a good idea to look at property index reports to get a good idea of property growth trends.

Recent index’s report Northern cities such as Manchester and Edinburgh are registering high levels of growth, reporting a rate of growth of 7.0% and 7.1% respectively. As we reported in our recent article about rental yields, the best areas to grab an investment property seem to be Northern university cities.

However, if you’re looking to buy a property to sit on for a while, it’s a bit more difficult to track than rental yields. Aberdeen and Cambridge both had big decreases in the average house price, with Aberdeen recording a 5.7% loss.

Regardless, figures from earlier this year put the North-West of the UK as the fastest growing housing market, with property in the capital city losing value. Rapid infrastructure investment and growing transport links mean these Northern cities are becoming much more desirable for property investors.

The gap between London and the rest of the UK is expected to narrow in the coming months. That’s down to house prices in the rest of the country rising whilst London prices are staying stagnant, following a continued trend. The last few month’s Hometrack Reports have found a similar loss of momentum in London’s growth. This is likely due to the cost appeal of commutable towns and cities around London, the unaffordability of many properties in the capital, and the increasing wage-property price ratio.

However, if you’re looking for a property which is much more likely to grow in value than central London, look to its leafy suburbs. Closer to London, the option of areas such as Redbridge are appealing; look for great transport links to central London with the appeal of rural parks and quaint pubs. The outer boroughs are extremely in-demand for students studying in London, young graduates, professionals and new families, which continue to drive prices up.

Around the London commuter belt, areas such as Stevenage that are within 45-minutes of travel time but are much cheaper and a good guarantee for increasing growth. The brilliant transport links are due to be extended as well – the Great Northern railway line is about to connect Stevenage to Gatwick and London Bridge.

Slough is another city which should be considered for its connection with London, placement in terms of the new development of the Crossrail and overspill from London.

When looking for a property to invest in, the key is to look for areas which have a high demand which is likely to increase. Aiming for areas investing in education, infrastructure, jobs and transport links (especially with London) appears to be the best bet.