REVEALED: Top 20 areas for property investment over the next 5 years

REVEALED: Top 20 areas for property investment over the next 5 years

By Debbie White

Think the property market is faltering? Research from Barclays says otherwise, with prices in some pockets of London tipped to rocket by over 30% by 2021.

What’s the latest?

House prices across the UK are tipped to rise by an average 6.1% over the next five years, increasing to an average value of almost £300,000 from their current**£274,000**.

This is according to the first ever Barclays UK Property Indicator report, which claims it will be buy-to-let investments and high-net worth millennials that will underpin the rise between now and 2021.

Richmond upon Thames, in south west London, leads Barclays' top 20 property hotspots with anticipated price rises of 39.1% over the next five years.

St Albans and Three Rivers, both in Hertfordshire, rank second and third, where house prices are forecast to leap by 38.8% and 34.6% respectively over the same timeframe.

For the other areas in the top 20 hotspots, please see the table below.

Above: A two-bedroom terraced home for £650,000 in Windsor, which ranks 17th in Barclays' 20 investment hotspots

Why is it happening?

According to Barclays, millennial investors will be a key driver in house price growth over the next three to five years. Those surveyed for the research already have 41% of their investment portfolio tied up in property, which compares to 23% of those aged over 55.

Younger investors are also 'more bullish' in their approach to investing in bricks and mortar, says Barclays. Of those aged between 18 and 54, three-quarters intend to grow their property portfolio by 2021, compared to just 10% of the over-55s.

High net worth millennial investors are also likely to own more than one property. Many are already reaping the rewards of this with almost half (48%) of their annual income generated from rent.

Above: A three-bedroom flat for £555,000 in Stratford-upon-Avon, which ranks 20th in Barclays' 20 investment hotspots

Who does it affect?

In terms of regions, the south is expected to see the largest rise over this period.

But the Barclays report also shows property hotspots will increasingly emerge in other areas of the UK, particularly the north and Midlands which represent 'good value for money and income stability'.

Over one-third (38%) of investors who are considering buying a home in the north believe that prices will rise there, and more than a quarter (27%) cite strong rental income as their reason to invest.

Behind London, the East of England and the south east, the Midlands is tipped for the biggest annual house price growth over the next half-decade, at 1.22%.

Warwick in the West Midlands has emerged as one of the top 20 areas of highest growth, with an expected annual increase of 5.31%. This is driven by above-average earnings and favourable conditions for start-up businesses, says the report.

Scotland ranks next with anticipated property price growth at 1.15%. East Renfrewshire, just outside Glasgow, features in the top 20 UK hotspots with rises forecast at 4.37%. Its large proportion of highly-qualified residents are expected to drive up prices.

Above: A top floor, two-bedroom flat for £205,000 in Warwick, which ranks 10th in Barclays' 20 investment hotspots

Sounds interesting. What’s the background?

The research compiled by Development Economics on behalf of Barclays involved analysing data from 12 key indicators. These include past trends on property prices, rental increases, employment levels, commuting patterns, earning levels and projected population growth.

Dena Brumpton, chief executive officer, wealth and investments, Barclays, said: "High-net worth investors typically own three properties, and over a quarter plan to buy property because they believe it offers long-term investment security.”

Did you know that Zoopla has its own ‘Zed-Index’? It puts the current average property value at £305,500.

Top 3 takeaways

  • Barclays research shows top property investment hotspots in the UK, including Warwick
  • House prices will rise by 6.1%, increasing the average property value to £300,000 by 2021
  • Millennial investors are fuelling the property market

You might also be interested in the following...

RegionAreaAverage annual % increaseOverall % increase (2017-2021)
LondonRichmond upon Thames6.82%39.10%
EastSt Albans6.78%38.80%
EastThree Rivers6.12%34.60%
South WestCotswold5.67%31.80%
South EastMole Valley5.35%29.80%
West MidlandsWarwick5.31%29.50%
East MidlandsSouth Northamptonshire5.27%29.30%
South EastWaverley5.03%27.80%
South WestEast Dorset4.96%27.40%
South EastElmbridge4.79%26.40%
East MidlandsRushcliffe4.65%25.50%
South EastWindsor and Maidenhead4.54%24.90%
ScotlandEast Renfrewshire4.37%23.80%
South EastHart4.29%23.40%
West MidlandsStratford-on-Avon4.23%23.00%

RegionExpected average annual increase (%)Overall % increase (2017-2021)
South East1.69%8.74%
East Midlands1.30%6.67%
West Midlands1.15%5.88%
South West1.04%5.31%
North East0.88%4.48%
North West0.79%4.01%
Yorkshire and The Humber0.71%3.60%
Northern Ireland0.60%3.04%

What areas do YOU think are likely to become property hotspots in the next five years? Tell us by posting a comment below...