The Fastest-Growing Cities In The UK
The secret behind successful property investment is timing. The ideal scenario is to buy a property when it is cheap and to sell it at a later date when it has increased to its optimum value. Sometimes that might be because you have invested money in developing and improving the property, but you really want it to increase in value because the area it is in becomes more appealing and more in-demand. That costs you nothing.
Predicting when to invest in an emerging market can be very difficult, you don’t know when it has peaked as an in-demand region, and this can be influenced by many different things, such as jobs, a rising population, a nearby cultural attraction opening or good transport links emerging. What you want to see as a property investor who has already bought a property in an area, is these influences resulting in demand for housing outstripping supply, so that house prices rise, rent prices rise and buy-to-let rental yields are more attractive.
Here we are going to look at the fastest-growing cities in the UK, but also try to understand why they are in this list, as opposed to some major names you might be surprised to find aren’t. This will help us establish a rough criteria for judging the merits of a city as an investment opportunity.
Understanding what makes a fast-growing city an investment opportunity
You might think the seven cities we have selected as the fastest-growing in the UK are not obvious choices. London is the city everyone might expect to be on the list, but it has suffered from a rather saturated and hence stagnant property market in the last decade as people seek more affordable housing and equally good job opportunities elsewhere in the country. However, of course there will always be housing demand and plenty of employment in the capital, but that doesn’t make it a fast-growing city. In simple terms, London has perhaps grown as big as it possibly can be, and although other cities might be catching up in terms of a thriving economy, that doesn’t mean London won’t always be a strong economic centre.
Since the turn of the new millennium, there has been a lot of talk about the ‘Northern Powerhouse’, and yet none of those cities appear in our list either. Between 2002 and 2015, Manchester, Leeds, Birmingham and Liverpool were the fastest-growing cities in the UK, but at that time they had a lot of catching up to do after years of under-investment and industrial decline. They, along with Newcastle, are all now thriving retail hubs and have enjoyed rapid regeneration. Leeds, in particular, has become a prominent national centre for the financial, legal and digital sectors, and indeed all of the Northern Powerhouse cities remain very attractive places to live. But Government policy is affecting these big northern cities, with planning policies prioritising residential developments over commercial space. This makes it easier to turn a commercial space into residential space, which is where other towns and cities are now catching up with the Northern trailblazers.
Elsewhere in the country, traditional manufacturing centres in the Midlands and North East have suffered from Brexit uncertainty and big names relocating. You can also be swayed by mis-leading information when assessing a fast-growing city. In 2018, Liverpool, Leeds, Birmingham and Glasgow were among the fastest-growing city centres in the UK<sup>1</sup>, but that doesn’t necessarily translate to the city as a whole. In most cases this is down to expanding universities attracting a younger population, and big investment in city centre living, retail, infrastructure and culture. But outside these city centres, such prosperity is not always as visible in the suburbs.
As a potential investor, you want a fast-growing city to have opportunities and prosperity across the board, with good signs that the city’s popularity is sustainable and long-term. This requires a good balance of positive influences such as jobs growth, economic growth and population growth, along with investment commitments and regeneration commitments. Where this balance is currently being achieved has led to a north-south divide which has always existed, but now presents itself in a different way. And it can be seen in the definite south-eastern domination of our list of the fastest-growing cities in the UK.
As a 1960s new town, Milton Keynes is maligned for a lack of character and history, but as a blank canvass it offers great opportunities for expansion and investment and has emerged as a city with a quality of life above many more traditional big-hitters. Situated in Buckinghamshire around 50 miles north west of London, it is a natural attraction on the commuter path to the capital. But it shows very promising signs of becoming a major city in its own right.
This is nothing new either. In 2016, a City Tracker report, by Cebr and Irwin Mitchell, showed 3.4% employment growth in Milton Keynes, and predicted a 22.6% growth in the city in the ten years up to 2026<sup>2</sup>. This appears to be happening, as a high share in service and knowledge-based industries are giving Milton Keynes a strong local economy and a reputation as a great place for start-ups and SMEs too.
Local economy is approximately £13,900m Gross Value Added (GVA)
Economic growth year-on year is 2.1%
Population increase is expected to rise to 294,707 by 2028
Jobs growth year-on year is 1.3%, the 13<sup>th</sup> largest in the UK<sup>3</sup>
Major employers in the city are Argos, Mercedes Benz, Suzuki, Volkswagen, Red Bull Racing and Network Rail and Santander, who all have major centres and offices in Milton Keynes.
The successful economy of Oxford leans heavily on its reputation as a world famous centre for academia. Its traditional university heritage has spawned an important centre for jobs in health, education, research, technology and publishing. It also has a motor manufacturing tradition, as the former home of Morris Motors and currently the Mini brand. But as the only city in the Oxfordshire region and something of a critical strategic outpost between London, Birmingham and Bristol, Oxford is a pretty safe bet for property investment if you find the right circumstances.
Local economy worth £8000m GVA
Economic growth is 1.8% year-on-year
Jobs growth is 4% year-on-year, the fourth largest in the UK
The average house price is £395,000, the third highest in the UK<sup>4</sup>
Again, the signs were good in 2016, when the City Tracker report predicted a 22.5% future growth for Oxford leading up to 2026<sup>5</sup>, and this has been reflected in big investment in housing infrastructure since, with a commitment to build 100,000 new houses before 2031.
Peterborough is a cathedral city but has benefitted from being designated as a new town in 1967. It is technically situated in Cambridgeshire and is the biggest city in the East Anglia region, but perhaps benefits most from its excellent transport links with London and the north. Peterborough is on the East Coast Main Line route between Leeds and London King’s Cross/St Pancras, and is also on the A1 motorway. Houses and jobs have been created through strong associations with agriculture, engineering, manufacturing, food & drink, energy and the environment. But its location has resulted in Peterborough becoming a major distribution hub, with big names such as Tescos and Debenhams having central distribution centres there and the £140m Gateway Warehouse and Distribution Park is a big employer in the city too.
Local economy is worth £6400m GVA
Economic growth is 1.7% year-on-year
Population forecast is to be 214,800 by 2028
Jobs growth is 1.2% year-on-year, the 16<sup>th</sup> largest in the UK
House prices average out at £197,000<sup>6</sup>
Back in 2016, the City Tracker report predicted a growth of 16.7%<sup>7</sup>, which was perhaps on the back of a £1billion investment in the city centre which was completed in 2012. And to further substantiate that Peterborough’s future has looked bright for a long time, in 2005 the city’s economic growth was 6.9%, which flew in the face of a national average of just 5.5%<sup>8</sup>.
Much like its fellow university goliath Oxford, Cambridge has a one in five student population, but its economic prosperity comes on the back of being a world leader in research and development in various sciences, although of course the world famous universities certainly contribute to a buoyant economy, and have the knock-on effect of attracting vast revenue from tourism also.
Local economy is £9500m GVA
Economic growth is 1.7% year-on-year
Jobs growth is 2.2% year-on-year, the second largest in the UK
Average house price is £413,000, the second highest in the UK behind only London<sup>9</sup>
The City Tracker report from 2016 predicted Cambridge would see the highest growth of any city in the UK over the next ten years, predicting 25.1% growth<sup>10</sup>. This is being borne out by a big commitment from service-based industries, and a density of hi-tech businesses in various science parks has seen Cambridge labelled as the Silicon Valley of the UK. Microsoft have their UK research office in Cambridge, whilst Marshall Aerospace is another prominent employer.
Southampton is famous for a maritime heritage, but this contributes more than just history and tourism. The biggest city in Hampshire is also the second largest container port, and is prominent in the export of motor vehicles and for its oil refineries and chemicals production. A prominent and improving university is also helping to build the economy and the city’s reputation.
Local economy is £7400m GVA
Economic growth is 1.7% year-on-year
Jobs growth is 0.7% year-on-year
Average house price is £199,000<sup>11</sup>
The relatively cheap housing makes Southampton one of the best investment opportunities in the UK, and recent regeneration of the waterfront with various marina developments present a prosperous city built on strong distribution, business and financial sectors.
Another south coast city and this one more famous as a seaside resort, but it is a myth that Brighton relies heavily on tourism. It is perhaps the UK’s most fashionable coastal hotspot, with a famously independent spirit, but it is also an important business and commercial centre. Combined with nearby Hove, this is a region that has key employers in the financial services and media & creative industries. And as a major commuter route to London, property is thriving in Brighton with a quality of life that rivals the diversity and richness of the capital itself.
Local economy is £8000m GVA
Economic growth is 1.2% year-on-year
Jobs growth is 1.2% year-on-year
Average house price is £368,000<sup>12</sup>
The City Tracker report of 2016 earmarked Brighton for a 19.3% growth up to 2026<sup>13</sup>, and the city appears to be on track to meet that. Brighton is host to the European headquarters of American Express and also has prominent offices for Lloyds Banking Group and Legal & General. There is also an emerging new media industry in Brighton, with a number of employers developing gaming and interactive technology.
Norwich had a traditional association with the textile industry and Coleman’s Mustard have long been a major employer in the city, and remain so, but since the 1980s Norwich has emerged as a centre for more service-based industries and research projects. It is a popular tourist region with a proximity to the Norfolk Broads, but Norwich belies an image of quintessential Middle England, with big employers in financial services, public sector, light manufacturing, technology and research.
Local economy is £3000m GVA
Economic growth is 1.2% year-on-year
Jobs growth is 0.6% year-on-year
Average house prices are £202,000<sup>14</sup>.
In 2016, Norwich’s growth potential was predicted to be 18.1%<sup>15</sup> by the City Tracker report and the more affordable housing certainly identifies Norwich as a rapidly emerging market and a promising opportunity for property investors. The University of East Anglia is also building a good reputation and has had an influence on the establishing of various research parks around the city, and which also attracts prominent organisations such as the Institute of Food Research.
Identifying the right city for property investment
As you can see from the list above, fast-growing cities offer several different strands in terms of their attraction to the property investor, whether you are looking to flip a property or start a buy-to-let business. These attractions can be investment, regeneration or jobs. The key is making the right selection at the right time, and knowing when a city might plateau in terms of its appeal and market value. Some of these cities are very attractive, but house prices are already quite expensive. Whilst you might drop lucky with a timely investment in a cheaper city such as Norwich or Southampton, at least cities like Cambridge or Brighton represent an area where you can invest with confidence, and a stable property market at least means you are less likely to lose money.
In all cases, you can carry out extensive research online, so that even if you are not from the area or familiar with it, you can quickly learn about historic property trends, the current economic situation and imminent or future plans for investment, employment and housing. This should help you make an informed choice, and if you time it right, a very successful one.
Marais, John Regional Gross Value Added 1989–2003Archived 1 December 2007 at the Wayback Machine (pp.240–253) Office for National Statistics, December 2006.