UK Property Market Outlook: Regional Cities Set to Outperform London in the Coming Years

UK Property Market Outlook: Regional Cities Set to Outperform London in the Coming Years

The latest property forecasts reveal an important trend that could shape the UK property market over the next five years, with regional cities expected to outpace London in terms of capital appreciation. This shift comes as a result of the Autumn 2024 Budget’s impact on the property market, including tax changes and regulatory adjustments that are making London less attractive for property investors in the high-end and prime sectors.

London's Prime Market

According to Savills, one of the leading property consultancy firms, the average price growth in prime central London (PCL) is projected to be slower than in regional markets. The anticipated changes in tax laws, such as higher Stamp Duty rates for landlords and the elimination of non-dom status, have created new challenges for London's property market. As a result, Savills forecasts that prices in the PCL sector will fall by 4% in 2025. Over the next five years, PCL prices are expected to rise by just 9.6%, with modest growth of 1% in 2026, 3.5% in 2027, 5% in 2028, and 4% in 2029.

Similarly, the outer prime London market is predicted to see slower growth. After remaining flat in 2025, prices in this segment are expected to grow by only 3-4% per year through 2029, resulting in a 14.7% increase over the next five years.

Regional Markets Set to Outperform

In stark contrast, the regional property market is poised for stronger growth. Savills forecasts that the prime regional markets will experience an 18.2% increase in property prices over the next five years, significantly outperforming London. Additionally, mainstream UK markets are projected to see a substantial 23.4% rise in prices over the same period.

This growth in regional areas comes as a result of several factors. High demand for properties in cities like Manchester, Leeds, and Birmingham—combined with more affordable prices compared to London—makes these locations highly attractive for both buy-to-let investors and owner-occupiers. As affordability in London remains stretched, many buyers are turning to the region for better value and stronger capital growth potential.

Why Investors Should Look to Regional Cities

The changing fiscal landscape, along with the impact of higher Stamp Duty and reduced demand for the most expensive properties in central London, makes regional UK cities an increasingly attractive option for investors. Cities like Leeds, Manchester, and Birmingham are experiencing strong price growth, thanks to ongoing regeneration, infrastructure improvements, and increased demand for rental properties.

At Magnate Assets, we believe this trend represents a unique opportunity for overseas investors to capitalise on the growth of these dynamic regional markets. Not only do these areas offer strong rental yields, but their affordability and development potential mean they are likely to deliver higher returns in the medium to long term.

Keith Egan, Managing Director of Magnate Assets, commented: “While London remains an iconic market, the shift towards regional cities is clear. The combination of strong demand, affordability, and ongoing investment in infrastructure makes areas like Manchester, Leeds, and Birmingham ripe for capital appreciation. We are advising our clients to consider diversifying their portfolios by focusing on these emerging markets for stronger returns.”

Conclusion: A Strong Future for Regional Investment

The property market dynamics in the UK are shifting. While London may face slower growth due to fiscal changes and regulatory pressures, regional markets offer substantial growth potential, driven by increasing demand, affordability, and ongoing urban regeneration. For investors looking to achieve solid returns over the next five years, now is the time to look beyond London and explore the emerging opportunities in the UK’s regional cities.

At Magnate Assets, we are here to guide overseas investors through these exciting opportunities. If you’re interested in learning more about how regional UK cities can enhance your property portfolio, get in touch with us today.

Key Points

• London’s prime property market faces challenges with tax changes and higher Stamp Duty.
• Regional markets, such as Manchester, Leeds, and Birmingham, are set to outperform London in the next five years.
• Savills forecasts a 23.4% rise in mainstream UK market prices and an 18.2% increase in prime regional markets by 2029.
• Investors should consider diversifying into regional markets for higher returns and better capital growth potential.