For many property investors, there's a certain sense of reassurance to be had from going with the herd. After all, if thousands of other investors are turning their collective gaze upon the same destination, they can't all be wrong, can they?
It's a rhetorical question, of course, but it points to an important aspect of property investment, which is all about picking the right time to buy. The more that investors flock to a place, the more demand that creates, and the more average prices tend to rise. That makes it even harder for latecomers to secure a good, well-priced deal. It's a phenomenon that we're seeing in many big university cities, and it will doubtless continue to be the case for many of them.
The ideal for any property investor is to buy at the lowest possible price and then see that investment appreciate in value, while at the same time generating a strong yield. That's less and less likely to happen in a well-known 'herd' destination, but there are some British towns and smaller cities where the prospects are much better.
One such example is property investment in Halifax.
Why Invest In Halifax?
Inward investment can be an important indication of economic growth to come. There's no hard-and-fast causal connection but if you find a relatively small town attracting large sums of public and private money, the chances are good that it will energise the local economy, accelerate the growth of local businesses and generate increasing numbers of local jobs.
That's all true in Halifax and the reasons as to why to invest in Halifax have only grown over the years. In 2017, the town was the subject of a number of important urban regeneration projects, with a total value of more than £150 million. That included the opening of a major tourist destination (the £19 million Piece Hall, whose visitor numbers have surpassed all expectations), together with the £6.5 million Square Chapel Arts Centre, and the Calderdale Industrial Museum.
Moreover, investment in halifax hasn't stopped. Since the beginning of 2019, Calderdale Council has reported a spate of new developments and planning consents for new commercial properties. In February, for example, West Yorkshire Combined Authority Investment Committee contributed £3 million from the Local Growth Fund towards the £10 million cost of refurbishing Northgate House. The former council offices will create circa 40,000 square feet of premium office and retail space, which will be built alongside a brand new sixth form centre, on the site of the former Halifax Central Library.
In May 2019, Calderdale Council announced the start of another multi-million pound redevelopment - this time centred on the Beech Hill estate. The work began with the demolition of three tower blocks that had stood vacant for over a decade.
Much of this work has been kick-started by the Leeds City Region Growth Deal, a £1 billion package of public investment designed to accelerate business growth and job creation. The Deal has also enabled the creation of the West Yorkshire-plus Transport Fund; a financial mechanism that is helping to improve road and rail infrastructure across the region. Halifax is one of the towns that will most directly benefit from it. Its central station has already been revamped and, in March, the council announced that plans for the new £20 million Elland railway station were progressing on schedule. It declared that the new facility would "link into the existing Calder Valley rail line, allowing for direct access to stations in Leeds, Bradford, Halifax and Huddersfield."
Other big, recent investments in Halifax have included:
- The £150 million Calderdale Transport Improvement programme.
- £58 million invested in the redevelopment of Halifax town centre.
- £35 million invested in Broad Street Plaza, phase 1.
- Construction of the £9 million New Central Library.
- £40 million committed to improvements to Halifax railway station.
In a large city, such sums might raise no more than an appreciative eyebrow, but consider that Halifax has a population of less than 85,000. In that context, the consequences of all this concentrated spending, plus ever-growing tourism revenues, can only be positive for local standards of living, businesses and jobs. All of which can only have a positive effect on property investment in Halifax.
Looking beyond the borders of Halifax itself, it is also worth noting that the town should see considerable benefits from being part of the Leeds City Region, which is forecasting the creation of 35,000 new jobs across the area. In a town that is already home to major employers such as Halifax plc, Royal & Sun Alliance and Nestlé, the prospects for job growth and rental demand should be excellent, making Halifax an ideal choice for property investment.
The Property Market in Halifax
Employment growth is a key signal for property investors. More jobs mean more residents with money to spend, fuelling their lifestyle aspirations and desire for better homes. Likewise, new vacancies often attract newcomers to a city, raising demand for rental accommodation still further. This can be particularly pronounced in urban centres and areas close to the key employment zones. In the case of Halifax, both outcomes will clearly be welcomed by landlords with properties to let.
Population growth is another good, long term indicator for property investment in Halifax. Halifax's numbers have been steady in recent years, but according to estimates published by ONS in 2018, they are set to increase noticeably by 2026. Its projected growth of 3.5% equates to an increase of 7,200 residents, many of whom will pile on the demand for good quality rental accommodation.
Economic instability and the uncertainties surrounding Brexit are often blamed for the slowness of the current UK property market. Nevertheless, Halifax and its surrounds appear to have been bucking national trends; researchers generally agree that the area has been performing both steadily and well and Halifax is proving to be a worthwhile place for property investment. According to Rightmove, "overall sold prices in Calderdale over the last year (2018) were 5% up on the previous year and 6% up on the 2016 level."
Figures published by ONS in April 2019 suggested that house prices in Calderdale had witnessed a rise of 3.9% over the last year, and this at a time when the UK average had been only 1.4%. In June, the local newspaper, the Halifax Courier observed that "the average homeowner in Calderdale will have seen their property jump in value by around £24,000 in the last five years."
Despite this strong performance, local prices still remain extremely affordable in comparison to UK averages. In March, the ONS found the average local selling price to be only £142,489, as opposed to the UK mean of £226,798. Such big discrepancies augur well for investors looking for good yields in an up-and-coming area. Faced with low prices and a wide choice of ultra-competitive fixed-rate BTL mortgages, investors should be able to secure exceptionally promising properties on predictable and highly affordable terms.
Rentals have been steady in Calderdale over the last 12 months, hovering around £630 pcm. However, given the credible prospects of job creation and an influx of new workers, additional demand could see those returns increasing. That, combined with the town's low initial investment costs, could make for some exceptionally attractive yields in Halifax for property investment.
* * *To find out more about investment opportunities in Halifax and Calderdale, please call our advisory team on 01244 343 355.