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It’s high time to invest in the North’s property market

Yann-Murciano Blend network

Yann Murciano is CEO at Blend Network

 

Some regions across the north of the UK and the Midlands have witnessed double-digit house price growth since the Brexit referendum. This trend is likely to continue as Prime Minister Boris Johnson reveals post-coronavirus plans to boost the North by building hospitals, schools and roads and creating thousands of jobs.

House price trends

Analyzing the trend in house price growth across the different UK regions since the Brexit referendum reveals a number of very interesting trends. In the first half of 2020, the average house price in the UK was 8.7% more expensive than the same house during the first half of 2016 leading up to the Brexit referendum.

Even comparing the first half of 2020 to the second half of 2016, in the aftermath of the Brexit referendum, shows similar results: the average house price in the UK was 6.2% more expensive earlier this year compared to four years ago.

But what is really interesting is the regional trend. During the first half of 2020, the average house price in the North West of the UK was almost 15% higher than the same house price in the months leading to the Brexit referendum, and 11.5% higher than in the aftermath of the vote.

The North West of the UK tops the list in terms of price appreciation, followed by the Midlands and Northern Ireland. These are all regions that our own research at Blend Network has showed as being very strong markets that we are happy to lend into.

In 2018 and 2019, 71% and 13% respectively of the loans we funded at Blend Network were in Northern Ireland. Meanwhile, the largest project by gross development value (GDV) we have funded is for a project in Stafford, in the Midlands.

Unloved areas

We strongly believe that the trend described above is likely to continue over the next two to five years, and even accelerate in the wake of Boris Johnson’s highly publicised plans to ‘level-up’ the UK economy by investing in parts of the country that had been left unloved. “Too many parts of the country outside London had been left behind, neglected and unloved,” the Prime Minister said recently, before unveiling his £5bn New Deal plan to invest in infrastructures across the North and scythe through red tape to speed up the building process.

As a result, it is high time for property developers and investors to look into this untapped part of the UK property market, which still suffers from much housing shortage as a result of years of underinvestment. For property developers looking to build into this market or refurbish and bring to life old properties, alternative lenders are likely to be the go-to.

Lending into this market requires a lender which understands the local market and can get comfortable with lending in smaller towns and cities, where traditional lenders wouldn’t do so.

Our experience of lending in places such as Northern Ireland suggests that the strength of the market – especially for low-cost houses with Help to Buy scheme means – makes those pockets very attractive, as often developers are able to sell off-plan and even achieve higher prices.

We at Blend Network have been and remain active in terms of in those markets where we see value, and where we believe more houses are needed to solve the UK’s housing shortage.

The UK’s unprecedented housing crisis requires unprecedented solutions. Alternative lenders have the opportunity to be part of this solution to help fund building and construction activity where is most needed.

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