Oxford and Cambridge may top the university league tables in the UK, but they score poorly for property investment, offering much lower rental yields and capital appreciation than other places, new research suggests.
Taking the top university hotspot for property investment is Newcastle, according to the analysis from property investment portal One and Only Pro which uses AI to create a ‘diamond’ investment ranking.
The analysis ranked the top universities in England and Wales areas based on the percentage of diamond properties on the market in June 2019. Investment properties were given a score from one to 10, with properties rated 10 dubbed as the most likely to increase in value.
Properties which score 10 are described as a once in a lifetime investment that will sell quickly. Properties with scores between seven and nine will outperform other similar properties.
Newcastle comes out with 12.8% properties rated as diamond, offering the most affordable property of all the university towns and cities, with the average property costing just £96,573.25.
In second place, with an average property price tag of £117,152.06 is Nottingham with 11.3% diamond rated properties, followed by Leeds with 6.5% and an average £103,376.84 price, then Sheffield at 5.8% and a price of £85,938.70, and Manchester at 5.6% with a price of
‘As expected, the highly sought after university cities of Oxford and Cambridge are giving investors poor returns, thanks to inflated property prices and lower rental yields than many other parts of England and Wales,’ said Henri Sant Cassia, the firm’s chief executive officer.
‘With the BTL tax changes and increased stamp duty on second homes, it pays investors to avoid buying property in the top five ranked university cities in London and the South East, as average prices are very high and rental yields are much lower, averaging 4% to 6%, compared with properties in the North West, which offers rental yields in excess of 10%,’ he pointed out.
‘Less sought areas such as Newcastle can earn almost 71% return on investment. This figure includes the costs of buildings insurance, a gas safety check, service charges and ground rents and it is all calculated automatically on our website,’ he explained.
‘With this kind of return, savvy investors could have earned their deposit back within two years. In many towns and cities with returns like this, a property’s mortgage can be cleared from the returns within several years and then investors have full ownership,’ he added.