Nothing about Liverpool comes as a surprise, and last week research from Andrews Property Group confirmed house price growth in northern cities is outpacing southern counter parts.  The news that whilst the average house prices in Liverpool had uplifted by 16.7% since March last year compared to 3.7% annual rise in London, was no shock.

Rightmove is witnessing the strongest sellers-market in the past decade with the greatest excess of demand over supply.  With a 40% increase in visitors to its website and 34% more buyers enquiring about each available property than the year before.  Two-Thirds of properties on agent’s books are agreed sales and the start of the traditional spring selling period shows number of sales agreed in the first week in March up by 12% on the previous year despite shortage of stock.

A lot has already been written about a UK property market that is taking advantage of temporary fiscal incentives, ultra-low interest rates on borrowings combined with a shortage of properties coming to the market.   But we can now add to the mix the new government scheme, launched 1st April, enabling lenders to bring back the 5 % deposit mortgages.  This can only add to pent up demand and heighten statistics for Rightmove viewings and enquiries.

But aside from the economic climate, government incentives and the behavioural economics that the pandemic has created in making people look at their lifestyle choices, let’s look at another factor that makes Liverpool stand out as the having the biggest increase in house price growth in the UK.

The role of affordability

Liverpool has been highlighted as the fourth most affordable place to buy a 3-bedroom house in the UK in 2021 which already makes those looking to make a decision based around affordability a good choice for a home. When you combine low property prices with high rental demand generating high yields, then Liverpool becomes an excellent choice, as supported by The Times who recently reported Liverpool as one of the best places in the UK for property investment with the average rental yield at 9.9% compared to the UK average of 3.6%.

The table below shows ratio of house price to residence-based earnings using data on averages seen over the last 10 years in house prices and earnings. It is notable that only the North West and North East is seeing a bigger increase in earnings to house price growth ratio providing more affordability when it comes to getting on the ladder and accessing mortgage funding to secure a property. In fact, the table shows that it is more affordable now for a buyer in 2020 to purchase a property in the North West and North East then it was 10 years ago – current affordability in other regions is at its worst in 10 years, with the average house price to income ratio at its highest levels since 2010.

Year Ending Sept 2010 Year Ending Sept 2015 Year Ending Sept 2020
Region Median House Price 2010 Median gross annual residence based earnings  2010 Ratio of house price to earnings 2010 Median House Price 2015 Median gross annual residence based earnings  2015 Ratio of house price to earnings 2015 Median House Price  2020 Median gross annual residence based earnings  2020 Ratio of house price to earnings 2020
England 180,000 26,276 6.85 209,500 27,838 7.53 249,000 31,766 7.84
North East 124,950 23,184 5.39 130,500 25,232 5.17 140,000 27,971 5.01
North West 132,000 24,291 5.43 142,500 25,711 5.54 170,000 29,700 5.72
Yorkshire and The Humber 135,000 23,949 5.64 143,000 25,114 5.69 168,000 28,800 5.83
East Midlands 140,000 24,453 5.73 157,000 25,609 6.13 196,950 29,430 6.69
West Midlands 147,500 23,901 6.17 161,000 25,598 6.29 200,000 29,481 6.78
East 189,000 27,229 6.94 230,000 29,259 7.86 292,000 32,944 8.86
London 280,000 32,003 8.75 390,000 33,109 11.78 483,000 38,592 12.52
South East 223,000 28,822 7.74 265,000 30,074 8.81 327,500 34,219 9.57
South West 187,000 24,474 7.64 212,000 26,496 8.00 260,000 30,039 8.66
Wales 135,000 23,490 5.75 142,950 25,254 5.66 165,000 28,273 5.84

Source: Office for National Statistics, Land Registry

In 2020, the Liverpool property market saw a 32% year on year-on-year increase in buyer interest and offers accepted increased 77% compared to previous year. While the demand in property is high, house price averages in the North West remain one of the most affordable in the country. It cannot be ignored that the affordability factor in the North West is a key reason for why the region is experiencing more growth than its southern counterparts.

With this in mind, the North West is lending itself to those who wish to take advantage of 95% mortgage government incentive with buyers standing to benefit more than those in the South. Currently, lenders will let an individual based around their personal circumstances borrow up to 4.5 times their annual income.

If we use the example of a first-time buyer in the UK purchasing at the national average of £249,000 using a 5% deposit, they need to show earnings of £52,566. A purchaser in the North West purchasing a property at £170,000 with a 5% deposit would need to show earnings at £35,888. With national average earnings at £31,766 in the UK it is clear to see why people are looking to the North West for affordability.

No crisis in confidence

House prices are predicted to rise in the North West by 24% through to 2024, outpacing the rest of the UK and with the affordability factor in play, it is certainly giving buyers more confidence in the Liverpool property market.