There is a significant house price premium for properties located in high rental demand areas, according to market insight from Benham and Reeves.
Benham and Reeves analysed average house price data in England’s high rental demand areas and compared it to the wider average house price in each region.
Demand for rental properties remained strong, with yields of up to and above 5% over the past five years.
Across England, the average house price in areas of high rental demand was £372,055.
This was a premium of 23% (£69,662) compared to the nation’s wider average house price of £302,393
In the North West, the average house price in high rental demand areas was £289,863.
This was a premium of 33% (£72,338) compared to the region’s overall average price of £217,525
In the North East, the high rental demand house price premium was 30%, while Yorkshire and the Humber had a premium of 29%.
The premium also exceeded the national average in the South East (28%), and West Midlands (25%).
In the East of England, where the high rental demand price premium was at its lowest, homes still sold for an average of 15% above the wider regional average.
Additional analysis showed that high rental demand areas offered landlords who invest an average yield of 5.49%, versus 5.15% in non-high rental demand areas.
Across England, there were an estimated 24,857 properties located in high rental demand areas available on the market.
The highest proportion were found in the South East (21%), followed by the East of England (18%), South West (17%), North West (12%), East Midlands (12%), West Midlands (10%), Yorkshire & Humber (7%), London (2%), and the North East (1%).
Marc von Grundherr, director of Benham and Reeves, said: “Things may not have been easy for buy-to-let landlords in recent years, as increased rules and regulations have been implemented to reduce the profitability of the average investor’s portfolio.
“However, it remains a strong and reliable investment, with long-term stability that often cannot be matched by other more volatile investment asset classes such as stocks or collectables.
“Of course, where you invest is as important as what you invest in and identifying high demand areas is vital when maximising the returns available.
“What’s more, investing in a high rental demand area is also likely to protect the value of your investment in the long run, with properties in these locations commanding impressive premiums when compared to the wider region.”
