Northern cities are set to outpace London and the South in house price growth over the next five years, property investment firm UOWN has predicted.
Higher mortgage rates are said to be a key factor, pushing more people to affordable regions in the North.
The North East is expected to see the steepest increases in house prices, with a 29.4% jump to an average of £226,627 predicted in the five years to January 2030.
The North West, North East, Humber, Yorkshire and Scotland are forecast to see a 5% increase in prices in 2025.
Haaris Ahmed, founder and managing director of UOWN, said: “High rates have had an oversized impact on the South in 2024 and this trend will continue in the coming years, driving homeowners and investors from more traditional hotspots to new areas.
“Some areas of the UK – including Leeds and Sheffield – have seen remarkable house price growth this year, as buyers perhaps seek out more affordable areas where house prices, despite increases, are still coming in under the national average.”
Stamp duty
Another factor driving people north is stamp duty changes, including lower thresholds and the higher 5% stamp duty surcharge.
Some 83% of transactions are expected to incur stamp duty from April 2025, compared to just 49% under the current thresholds.
Skelmersdale (Lancashire)
Skelmersdale in Lancashire is seen as the biggest growth area in the next five years.
The town is set in the Lancashire Valley on the River Tawd, while it has strong transport links to major cities like Liverpool and Manchester while offering a balance of urban convenience and green spaces, with easy access to the picturesque Pennines.
Skelmersdale has seen rapid house price growth in the past year, with average newly-listed asking prices rising by 8.4% in 2024.
A thriving hub of industry and retail, the town is surrounded by scenic wooded valleys and cloughs, with green open spaces and central woodlands weaving through the landscape.
Leeds (West Yorkshire)
Property in Leeds remains relatively affordable, with an average price of £270,000 and plenty of affordable options for investors.
With house prices projected to rise by 28% over the next five years – outpacing London’s expected 17% growth – the West Yorkshire city is predicted to be a strong opportunity for both rental income and capital appreciation.
Leeds contributes £69.4 billion to the UK economy, while it is home to major employers like Sky Bet, Channel 4, Asda, and NHS Digital.
With a population exceeding 800,000 and growing faster than the national average, demand for quality rental housing continues to rise.
High-yield areas like the city centre and Headingley offer rental returns of 6-7%, making it a strong performer in the buy-to-let market.
Sheffield (South Yorkshire)
Another city seen as appealing to buy-to-let investors is Sheffield. Property in the Steel City is very affordable and central areas, in particular, will are seen as having strong appeal to young professionals and students (S1, S2 and S3). A well-located one-bed flat in good condition can be purchased for around £110,000, and a two-bed flat for £140,000.
Sheffield offers impressive rental yields of approximately 7%. Ongoing public and private investments have only enhanced its desirability, making it an increasingly attractive prospect.
North Shields (Tyne and Wear)
North Shields is another area experiencing price growth, driven by a combination of factors.
House prices remain relatively low compared to major cities, making mortgage repayments manageable even amidst higher interest rates. With an average house price of £215,000, North Shields offers significant affordability, especially when compared to nearby Newcastle city centre.
Secondly, strong demand from investors and renters is fuelling growth, with better rental yields and lower entry costs attracting buy-to-let investors. Many of these investors are moving away from pricier areas due to increasing regulations and costs.
As larger cities become increasingly out of reach for first-time buyers, many are turning to commutable yet affordable towns with improving amenities. North Shields is becoming a hub for a growing professional community, benefiting from nearby economic growth while still offering excellent value for money.
Sunbury-on-Thames (Surrey)
The only location outside the North to make the top 10 is Sunbury-on-Thames in Surrey. This commuter town is in high demand due to its direct transport links to London—London Waterloo is less than an hour away—offering buyers a balance of connectivity and quality of life.
Situated on the north bank of the River Thames in the Borough of Spelthorne, the picturesque town saw a 12.5% rise in the average asking price of a home, increasing from £527,005 to £592,976. This marked the UK’s highest price increase last year. With further growth of 17.6% predicted over the next five years, Sunbury-on-Thames remains a prime investment spot for buyers and investors alike.
Ahmed added: “Home hunters and buy-to-let investors are certainly facing new challenges, such as higher stamp duty, fluctuating interest rates and stricter regulations, but that doesn’t mean the opportunities are gone.
“In fact, our research shows that looking beyond the traditional hotspots in the South East could be a smart move.
“With rising demand in the North and more affordable markets, there are significant growth opportunities for those willing to explore up-and-coming areas. The potential for long-term gains is very much still there, and house buyers and investors just need to know where to look.”
