A new study has revealed the top cities in the UK housing market for the fastest return on investment (ROI) when buying a one-bedroom property. This study analysed current market data from Zoopla, Rightmove, and Propertypal, comparing the average price of a one-bedroom property in all 76 UK cities and the Isle of Man to the average monthly rental income.
The results of the study show that Coventry is the top city to invest in property for a quick ROI, as it returns your deposit faster than any other UK city. It would take you only 14.8 months to earn back the average deposit of £19,875 with its exceptional rental yield of 12.2%. Not only is Coventry an attractive location for property investment, but it also has a vibrant music and arts scene, which draws in a diverse population of young professionals, students, and families.
Birmingham ranked second on the list, with an estimated 15.6 months for the 12.5% rental yield to return your initial deposit. LondonDerry in Northern Ireland ranked third, with only 17 months needed to recoup the initial deposit. An interesting point to note is that Londonderry has the lowest deposit amount of any area in this study, with a 15% deposit on the average one-bedroom property only costing £8,437.50.
Southend-On-Sea came in fourth place, with an average rental yield of 9.4% and a return timeline of just over a year and a half. The central Scotland city of Stirling took fifth place, following Southend-On-Sea closely behind, taking 19.5 months for the average property rental of £633.75 to return your 15% deposit on a one-bedroom property.
In sixth place is Bradford, taking 20.4 months to earn back a 15% deposit in the city. Derby took seventh place, with 21 months needed for the 8.59% rental yield to generate the initial property investment. In joint eighth place are Armagh and Newry, both having a deposit just over half that of Derby at £11,250, boasting a rental yield above 8%, and only taking 21.4 months to earn back your initial deposit.
Dundee claimed the ninth spot, with the average 15% deposit taking 22.2 months to return your initial investment. Milton Keynes rounded off the top ten, with an average ROI period of 22.3 months, only three days more than that of Dundee.
Furthermore, the study compared these figures to those of a three-bedroom property and found that a one-bedroom property returns a deposit 32.7% faster than a three-bedroom property. The average three-bedroom property in the UK has a rent of £1,648, takes 55 months to earn back a 15% deposit, and has a rental yield of 3.86%.
On the other hand, the average one-bedroom property in the UK has a rent of £957.13, takes 37.6 months to earn back a 15% deposit, and has a rental yield of 5.75%. This comparison reveals that investing in a one-bedroom property in one of the top-performing cities is a wise financial decision, as it provides a significantly quicker return on investment than a three-bedroom property.
