As the property market in London continues to cool, investors are increasingly turning their attention to the North West of England. With its vibrant cities, growing economies, and comparatively affordable housing, the region offers enticing opportunities. But for those looking to enter this market, a crucial question looms: is it better to invest in one-bedroom or two-bedroom flats?
The answer, as with many aspects of property investment, is not straightforward. Both options have their merits, and the right choice depends on a variety of factors, from available capital to long-term investment goals.
Two-bedroom flats, according to recent data, appear to have the edge when it comes to rental yields. Research from Howsy indicates that two-bedroom properties in the North West achieve average yields of 5.3%, outperforming the national average of 4.8%. This contrasts with one-bedroom properties, which typically offer lower yields, with the national average sitting at 4.1%.
But yield isn't everything. One-bedroom flats, with their lower entry costs, can be an attractive option for first-time investors or those looking to diversify their portfolio without committing substantial capital. They also tend to have lower maintenance costs, which can boost overall returns.
However, the broader appeal of two-bedroom flats cannot be ignored. These properties attract a wider range of tenants, from young professionals sharing to couples needing a home office – a factor that has gained significant importance in the post-pandemic world of remote work. This broader appeal can translate into more stable occupancy rates and, potentially, steadier long-term returns.
The Office for National Statistics adds weight to the two-bedroom argument, reporting that these properties command a median £174 extra per month in rent compared to their one-bedroom counterparts. Over time, this additional income can significantly boost an investor's returns.
But the North West isn't a monolithic market. Cities like Manchester and Liverpool, with their large student populations and growing tech sectors, present different dynamics compared to smaller towns in the region. In prime city centre locations, both one-bedroom and two-bedroom flats are attracting investor interest, driven by the region's economic growth and ambitious regeneration projects.
Mark Holden, a property investment consultant based in Manchester, offers a nuanced view. "While two-bedroom flats generally offer better yields and broader appeal, we're seeing strong demand for high-quality one-bedroom apartments in city centres," he says. "It really comes down to the investor's strategy and the specific location within the North West."
Indeed, location remains paramount. Proximity to transport links, local amenities, and employment hubs can often be more crucial to an investment's success than the number of bedrooms. The ongoing Northern Powerhouse initiative and infrastructure projects like HS2 are set to further enhance the region's connectivity and economic prospects, potentially boosting property values across the board.
For investors eyeing the North West, the choice between one-bedroom and two-bedroom flats should be guided by thorough research and a clear understanding of their investment goals. Those prioritising higher yields and long-term appreciation might lean towards two-bedroom properties. In contrast, investors looking for lower entry costs or to diversify their portfolio might find one-bedroom flats more appealing.
As the North West continues to attract investment and undergo regeneration, opportunities abound for attentive investors. Whether opting for a cosy one-bedroom or a more spacious two-bedroom flat, success in this market will ultimately depend on choosing properties in areas with strong fundamentals and potential for growth. In the ever-evolving landscape of property investment, due diligence and a keen eye for emerging trends remain the investor's most valuable tools.
