It’s hot spot season!
Just Googling around property and I can see that on a journalist’s ‘to do list’ in January is to produce the Property Hot Spot article.
Nothing wrong with that, by the way, we all need to make a living, and reviewing the property market in January makes perfect sense as we are all so obsessed with property in the UK.
Let’s stick buying in a ‘Hot Spot’ on our goal list.
If only it was that easy
I have to say, although I quite enjoy the hot spot chatter, I am a bit suspicious of it.
It usually includes a claim like “The (add your own number here) Best Places to Buy for Investment in the UK.”
But this usually only tells half the story. I’ll explain what I mean in a moment. Before I do, though, here’s what the article I was reading told me.
Shout out to The Sun, by the way, full article here if you want a read: https://www.thesun.co.uk/money/32779445/property-hotspots-england-scotland-berkhamsted-hertfordshire/
Apparently, there was significant growth in property prices in some areas of the UK in 2024. According to Zoopla, Berkhamsted in Hertfordshire was number one on the list with an average increase of £24,500 over the year—equivalent to £2,041 per month.
If you’re wondering (and I know you are), here’s the full top ten:
Top 10 Areas with the Highest House Price Increases in 2024:
1. Berkhamsted, Hertfordshire – £2,041 per month (£24,500 annually)
2. Waltham Forest, London – £725 per month (£8,700 annually)
3. Carluke, Scotland – £741 per month (£8,900 annually)
4. Glossop, East Midlands – £583 per month (£7,000 annually)
5. Didcot, Oxfordshire – £583 per month (£7,000 annually)
6. Porthcawl, Wales – £566 per month (£6,800 annually)
7. Polegate, East Sussex – £550 per month (£6,600 annually)
8. Yate, Gloucestershire – £541 per month (£6,500 annually)
9. Long Eaton, Derbyshire – £533 per month (£6,400 annually)
10. Blyth, Northumberland – £516 per month (£6,200 annually)
According to Zoopla, half of the UK’s 30 million homes increased in value in 2024, with 15 million properties seeing a rise of 1% or more. The average increase among these homes was £7,600.
Now, I don’t want to be a ‘glass half empty’ person, but that also means that nothing changed for the other 15 million properties.
And whilst I’m having a moan, a rise of 1% doesn’t seem a lot (to be fair, the article doesn’t say how many properties only had a 1% increase) and could be lost in the rounding.
But putting a positive spin on it, it’s definitely not 30 million properties all having price falls of 5%, 10% or more, so that is good. That day/year will come, by the way, and maybe sooner than many realise. As I said a couple of weeks ago, we can predict what will happen, just not when.
Looking ahead to 2025, Zoopla forecasts a 2.5% rise in house prices on average, although growth is expected to vary regionally due to affordability constraints. Northern regions, including parts of Scotland and Yorkshire, may see stronger gains, while affordability challenges could limit growth in the South.
In my experience, this is typical of when we are getting close to the top of the market. The South is too expensive for ‘investors’ and so money goes North to the cheaper areas. And when prices up North get ‘too toppy,’ then the crash. But we are a little way off that, I think.
By the way, none of this is financial advice, so don’t make any buying or selling decisions based on my ramblings and musings.
Richard Donnell, executive director at Zoopla, emphasised that market conditions remain varied:
“There is headroom for prices to increase in markets where housing is affordable compared to incomes, which covers many parts of northern England and Scotland. In contrast, affordability is more of a challenge in southern England, limiting price growth potential.”
So What Does All of This Mean for Us as Investors?
Firstly, let me just deal with the point I made earlier about ‘half the story.’
What often happens is that someone like Zoopla, or Rightmove, or Leaders, or Savills (you get the idea) will create a list of ‘the top ten performing areas, or towns or whatever’ and the press will then translate that as the top ten places to invest.
But, in my opinion at least, investing in property isn’t just about capital growth, unless (and please notice I’ve emphasised that strongly) your strategy is based on capital growth.
In my world, we start with cash flow, and capital growth is a bonus and not necessarily an expectation. Or perhaps over a long enough time period it is an expectation, but especially in the short to medium term it’s not a priority.
Again, not financial advice—you must work out what you want and how you are going to achieve it. I hope that makes sense.
Things are changing as the politics and tax regime change, but I know very few investors who buy (read ‘invest’ in journalist speak) principally for capital growth.
And so the premise that these could be the top ten investment areas, in other words, ‘investment hot spots,’ doesn’t really work for me.
I mean, what kind of yield will you get in Berkhamsted or Polegate or some of these other towns?
You’ll probably either have to subsidise the ‘investment’ by putting money in from time to time, or buy 100% for cash to have any chance of keeping it afloat. OK, I’m being extreme, but you know what I mean, and I’m probably not far from the truth.
Cheaper properties generally mean higher yields (and hopefully cash flow), so I’d prefer more affordable places like Blyth and Long Eaton, which have shown steady price growth and might offer better entry points for investors looking to achieve a balance between yield and long-term appreciation.
This is why it’s so important to know what you are doing and why (to have a well-thought-out strategy), so you are not tempted to go chasing some expensive property in an expensive area just because it’s in the list of top ten hot spots.
At the end of the day, the most important thing is to align your investment decisions with your financial goals, and not be influenced by media lists. Whether you’re after strong rental yields or long-term appreciation, knowing your numbers and sticking to your strategy is what will be the key to your success in the long run.
Here’s to successful property investing!
Peter
Peter Jones
Ex-Chartered Surveyor, author and property investor. https://thepropertyteacher.co.uk
PS. By the way, I’ve rewritten and updated my best-selling e-book, The Successful Property Investor’s Strategy Workshop, which is an account of how I put together my multi-property portfolio, starting from scratch and with no money of my own, and how you can do the same.
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