The Property Investment Brief: Exeter, UK

Where next to invest? We profile property hotspots around the world, detailing everything an investor needs to know.

The Essentials

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House Prices
Up 1.65% y-o-y (June 2017 – Land Registry)
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Returns
3.3% (South West, Your Move)
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Demand
55 days to sell (Home.co.uk)

Where is it?

Located in the South West, the city of Exeter is a small but colourful part of England’s history, dating back before even the Romans’ arrival in AD 50. 80 miles from Bristol and 45 miles from Plymouth, the city sits on the River Exe, close enough to the coast to make it a popular destination for tourists travelling to Devon’s seaside towns, such as Teignmouth, while also positioning it as a business centre for the neighbouring region of Cornwall.

Who lives there?

Exeter is home to over 125,000 people, ranging from the 20,000+ students attending the University of Exeter to the 7,000 employees at the Royal Devon & Exeter Hospital and the workers at the city’s 5,000 registered businesses, which include BT and EDF. 35,000 people also commute into the city every day, emphasising its important role within the local economy, alongside the other large urban centre of Plymouth. The result is a busy hub of activity and people, with the sizeable student population contributing to demand for rental accommodation. According to research by Durham University, the city’s population is only expected to expand in the future.

Teignmouth Pier

Why invest?

Despite the uncertainty surrounding Brexit, the UK remains an attractive safe haven for investors, thanks to the long-term stability of the country’s economy and the unchanged fundamentals of its housing market. With London’s real estate largely overheated, the UK’s regional urban centres have become increasingly sought-after, from the Northern Powerhouse hubs of Liverpool and Manchester to capital growth hotspots, such as Bristol.

Exeter’s appeal lies along similar lines, with both a structural undersupply of property and a population that’s only getting bigger. According to Durham’s research, the city’s population is expected to grow to 143,000 by 2036, partly driven by improved life expectancy and a high birthrate, but also due to migration from other parts of the country and overseas. The latter is also fuelled by the number of students looking to study at Exeter, with the Sunday Times’ Good University Guide ranking the institution seventh best in the UK.

Thousands of new homes are therefore needed to accommodate these people, particularly students: Spareroom.co.uk’s figures suggest that the average rent for a student home has risen by as much as 10 per cent in the UK over the last year, due to the lack of supply.

With over £450 million invested in the city’s infrastructure, from offices and sports venues to stations and roads, investment opportunities continue to appear – and that population growth continues to be encouraged. The South Devon Highway, for example, which opened in December 2015, has helped ease the flow of traffic in the area, alleviating a bottleneck and making it more appealing for tourists to visit the area.

Indeed, tourism remains a strong sector for the city and surrounding destinations, with official figures showing that 2016 was an “exceptional” year for Devon, potentially outdoing 2015, when visitors to Teignbridge, Mid and East Devon generated more than £600 million for the local economy. Teignmouth, in particular, is a holiday hotspot that has retained its old-fashioned family appeal, thanks to its Victorian pier, crazy golf, beaches and activities such as Go Ape in the nearby Haldon Forest.

Together, the driving factors behind the area’s residential and tourist population are predicted to continue pushing up house prices. The current average house price in Exeter has risen 1.65 per cent in the last year to £286,378, outperforming Devon as a whole, where prices have fallen 0.17 per cent in the year to June 2017. Teignmouth has seen property prices rise 0.28 per cent.
According to Home.co.uk, Exeter’s market has sped up, with a home now taking a median of 55 days to sell, down from 57 days a year ago; while the typical yield for a property is 3.3 per cent, one of the lowest available in the UK, the rapidly expanding population and ensuing capital growth boost the overall return for property buyers. With stamp duty tax changes in 2017 forecast to cool down landlord investment in the UK, a tighter supply of rental property and growing costs for buy-to-let investors is likely to push up rents in the future as well.

Specific projects, such as the redevelopment of two detached homes in the area by The Coyne Group, can therefore offer a targeted ROI as high as 33.4 per cent per annum.

Who’s Investing?

UK buyers looking away from the crowded capital are increasingly turning to regional hotspots, with the potential for owning a holiday home in Devon and Cornwall also drawing interest. Overseas attention can also be expected from Chinese and Asian investors, seeking an attractive slice of the UK’s safe haven pie, and US buyers, taking advantage of the strong dollar against the pound.

Agents say…

“As investors turn to the UK’s regional centres for stable returns and affordable prices, Exeter is a property market worth exploring.”

 

Find out more:

View properties for sale in Exeter

 
 

Photos: Alison Day, Barry Lewis

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