The Liverpool
Property Market
September 2022
A segmented property market.
When looking at the Liverpool property market we see four segmented markets across the city…
1. The City Centre
2. The Outer City Centre Fringe
3. The Inner Suburbs
4. The Outer Suburbs
1. The City Centre.
We feel the city centre price point will remain strong. With maybe a levelling off in transactions due to inflationary pressures over the short term. Although we do not expect interest rates to come back down and expect to see them fall in line with inflation at around 4% over the medium term.
Liverpool City Centre has a consistently lower price point when compared to other Northern cities. Although it has seen strong capital appreciation over the last 10 years it still sits below the average house price for the UK.
A. Off Plan Property.
Property values £125k - £400k
As The City Centre provides a luxury product – apartments with excellent facilities such as gyms, cinema rooms and co-working space, catering for young professional renter. We feel rents will adjust in line with inflation and are already seeing this happen with rental yields increasing slightly at present.
Over the medium to long term, we expect to see strong capital appreciation continuing and great cash-flow through strong tenant demand providing high rental yields for the buy to let investor.
B. HMO and Aparthotels.
Property values £400k+
Holiday lets / short term lets (Airbnb) This is one of our main investment models for 2023. There is an advantage to growing a large, serviced accommodation portfolio as it benefits from economies of scale within the management of the business. Whilst providing higher yields than traditional BTL and there are additional tax advantages available for profits.
Over the short to long term, we see this as an exceptional model for strong cashflow. Due to Liverpool being a favoured UK tourist attraction having a strong weekend / leisure economy.
Looking to invest in serviced accommodation property?
Why not book a slot in our calendar to discuss your requirements.
2. The Outer City Centre Fringe.
Property values sub £125k
In Liverpool these are the properties built around the fringe of the city centre during the 1920’s and beyond. Generally, a high street located on the main arterial route into the city centre with rows of terraced properties sitting behind. Property prices are lower in these areas as are rental values.
However, as you can purchase a 3-bedroom terraced house here for the same price as a 1-bedroom city centre apartment yields are similar and sometimes higher as there isn’t a requirement for a service charge payment on single let property.
These properties traditionally have lower capital appreciation than the city centre due to affordability within the local population. Nevertheless, they still provide great cashflow due to their high tenant demand and low entry points.
We do not feel rents will go up in these areas in line with inflation and therefore the traditional buy to let investor will feel the squeeze on any new properties bought at current market values with higher interest rates.
However, these properties can work well for short-term-lets / serviced accommodation. Especially due to their proximity to the city centre and the cities football stadiums. They are much larger than a standard city centre hotel or aparthotel room. With the additional bedrooms bringing the cost per person per night down considerable.
Over time as the city centre expands North the commercial areas closest to the city centre fringe should see excellent capital appreciation.
3. The Inner Suburbs.
Property values £125k - £400k
In Liverpool these are the properties built in the suburban areas of the city during the 1980’s and beyond. Generally, consisting of residential housing estates with detached and semi-detached 2, 3 and 4-bedroom properties.
Property prices are higher here than around the fringe of the city centre. Properties are also larger than the traditional terraced offering with the addition of front and back gardens. Although on a cost per square foot basis, the price of property in the inner suburbs is generally lower than the city centre.
However, we feel it could be this market that could be hit the hardest in a downturn. As these areas tend to be relatively affluent and have experienced high demand and low supply with buyers paying considerably over asking price in recent years.
Therefore, some recent purchasers may have overburdened themselves with expensive property on fixed low interest rate mortgages. When these discounted periods come to term there may be challenging times ahead. With higher interest rates and cost of living expenses increasing.
As affordability goes down, as does future purchase price. So, we would expect to see the biggest house price dip happening here over the short to medium term. Although we do see this as a great opportunity to purchase below market value, and then add value through refurbishment, additional bedrooms, or kitchen extensions, etc. Holding the property over the long term to take advantage of high capital appreciation.
As a company we do like these areas for buy-to-let properties. Rental yields are reasonable, with tenants having well-paying jobs and high rent affordability ratios. If properties are leverage correctly or mortgage free these properties will pay a reliable yield with minimal fuss when let to families who tend to stay for the longer term.
Bought at the right time I would expect these properties to double in value over a 10-year period.
Looking to invest in buy to let property?
Why not book a slot in our calendar to discuss your requirements.
4. The Outer Suburbs.
Property values £400k+
In Liverpool these are the properties built in the suburban areas of the city during the 1920’s and beyond. Traditional houses built when Liverpool was an affluent seaport city. (The 2nd largest seaport in the UK after London) These areas generally, consisting of less densely populated areas with larger detached 4, 5 and 6-bedroom properties.
We are not currently investing in these types of properties.
