The lender’s year-end table takes account of five indicators: average total rent, yield, house price growth over the past decade, vacancies as a proportion of housing stock, and the percentage of the city population that rents.
In second place is London, which moved up four places on the year, and in third place is Bristol, which was 2021’s winner. Manchester itself moved up three places over the year.
This is the highest London has ever placed in this index.
While there was much shifting of positions across the year, of particular note is Oxford, which fell from second place to 11th. “The main factors causing were a decrease in rental revenue from last year, dropping from £627 to £595 this year, while short-term yield was also lower combined with a drop-in long-term return,” says the report.
And the East of England showed the most promise, with seven cities from this area finding a place in the top 20. “All cities [being Cambridge, Peterborough, Ludon, Southend, Basildon, Norwich, and Chelmsford] offered attractive long-term returns, with Southend seeing the biggest average annual increase in house price of all 50 cities featured, with a rise of 5.9%,” details the report.
Aldermore head of mortgages Jon Cooper says: “In its fourth year, our City Tracker highlights how quickly the UK housing market moves across the country. Year on year, we’ve seen the cities offering the best investment for landlords shift consistently.
“This highlights how landlords really have to be on top of their game to ensure they maximise their investment, looking for areas that offer value not only for the short term but for the longer term too.
“The mortgage industry has experienced a series of testing events with interest rates hikes, uncertainty in the UK economy, as well as stamp duty shifts and looming Energy Performance Certificate changes; factors that are not only affecting landlords but also their tenants, putting both groups under pressure.
“We encourage landlords to work together with their brokers, reviewing their portfolios to ensure they’re future proofed for further shocks that may lie ahead.”
