With London so expensive, many investors are turning to other cities

OBR predicts an average 4.7pc fall in house values in 2024. Liz Rowlinson finds the top locations for long-term price growth

Average house price in the city

There was disappointing news for homeowners last month, with the Office for Budget Responsibility (OBR) forecasting house prices to fall by 4.7pc in 2024. But where should buyers look for the best chance of price rises over the next decade?

With London having priced itself out for some investors, many have turned to Britain’s other major cities. Using the economic and demographic drivers that will underpin price growth, CBRE, a global commercial real estate company, ranked 50 towns and cities by sector, including office space, retail, leisure, tourism, student accommodation and housing supply. Here are the 10 cities to watch.

Population growth and the largest rental market gives Birmingham the biggest family home market in five years’ time, according to CBRE.

Look for good connectivity, says Ian Crampton, of agent Ferndown Estates. Chelmsley Wood, next to pricier Marston Green, is popular. “Three- bed houses are being bought for £175,000 and converted into houses in multiple occupation for students and young professionals paying £ 650 a month,” he says. Marston Green to the city centre is 13 minutes by train. Nearby Kitt’s Green and Stechford are in the B33 postcode, which had one of the highest price increases in 2022, according to OnTheMarket portal.

Although Selly Oak is a go-to for student lets, Northfield is a good rental investment, says Raj Bedi of Martin & Co. “Three- bedroom houses for £200,000 are being bought then rented out for £1,100 a month,” he adds. include Waterloo, Aigburth, Sefton Park, Toxteth and Anfield, where the average terraced house – popular with investors for 7pc yields – sells for £106,979, according to Rightmove.

With 92,000 students, the average price has risen from £108,221 in 2013 to £208,557, according to Rightmove. Some of the best rises are south of the Clyde, such as New Gorbals, Pollokshields, Strathbungo and Newlands.

Growth has been seen in Finnieston where new energy- efficient developments sit alongside Glasgow’s traditional tenements. “Some of Glasgow’s biggest employers are close by, such as Barclays, BBC, Morgan Stanley, JP Morgan,” says Carole Mackie, head of residential development for Savills Scotland. Financial companies employ 37,000 in the city – and this is growing. Virgin Money has a new HQ there.

Tourism is the driver. Domestic travel is forecast to increase 36pc by 2030 with Brighton, Southampton, and Glasgow to be the biggest destinations for domestic visitors. The top port for cruise passengers, Southampton has a “high” score of 82/100 as a short-term rentals location (demand and revenue potential) for would-be investors, says the market analyst AirDNA.

Woolston is one to watch, says Barney Brander of Lets Rent estate agents. “Values are lower than across the river [ Itchen] and with development around Centenary Quay it’s popular with investors,” he says. The average house price in Woolston is £245,347 (Rightmove), and two-bedroom starter homes cost £230,000 to £250,000, and rent for £ 1,100 to £ 1,200 per month, according to Brander. “Average yields in the city are 5.57 to 6pc.”