How to identify where to invest in property in 2025
Successful property investment hinges on understanding market dynamics and identifying areas with strong economic growth. Here's a streamlined overview of what to consider in 2025.
1. Key factors for profitable investment
Local economy: A robust economy supports demand, price increases, and rental growth.
"Instant Equity" opportunities: Seek properties below market value for immediate returns, though these opportunities may be rare.
Rental profitability and capital growth: Analyse potential investment areas for long-term performance.
2. Identifying investment hotspots
When assessing investment locations, examine housing demand, affordability, wage growth, and supply trends.
Colliers and Paragon Bank highlight cities like Manchester, Liverpool, and Sheffield for strong rental yields and property growth.
Sometimes, local opportunities outperform "hotspots” so do your research thoroughly or speak to a local agent.
3. Questions to ask about a location
Before investing, investigate things like:
Government and infrastructure projects: Areas like Liverpool Docks, Sheffield, and the Oxford-Cambridge corridor signal future demand.
Population growth: Areas with a growing 20-45 demographic typically see higher rental demand.
Supply vs. Demand: Understand current demand trends for specific property types (e.g., family homes or student housing).
4. Potential for prices and rents to increase
Evaluate historical price trends using tools like the Land Registry House Price Index. A local agent will also be able to help advise on this with their own knowledge of the area you’re thinking of investing in. Here, you can clearly see how four cities have performed quite differently:
| City | Avg. Price Dec 2022 | Avg. Price Aug 2024 | Change (%) | Avg. Annual Increase (%) | Exceeded Inflation? |
|---|---|---|---|---|---|
|
Newcastle |
£187,093 | £202,936 | +8.5% | 2% | No |
| Manchester | £243,834 | £247,901 | +1.7% | 5.2% | Yes |
| Oxford | £450,884 | £489,188 | +8.5% | 3.9% | Yes |
| Bristol | £355,428 | £353,996 | -0.4% | 4.4% | Yes |
While Newcastle has grown recently, it lagged behind inflation historically. In contrast, Manchester shows consistent growth, though localised research is essential for accuracy. Meanwhile, average prices in Bristol are still below where they were two years ago, but the city has performed well over time, so it’s worth investigating more closely.
5. Next steps
Speak with local property experts for insights tailored to your goals. Consider how areas align with your financial objectives, whether you're focusing on rental income, capital growth, or a balanced return. At Leaders, we have branches nationwide. To get advice for the area/s you’re interested in investing in, get in touch with the local branch who will be happy to help.
