Commercial Director - Property
Regional Diversification has long been a guiding principle for property investors. Traditionally, the conversation has centred on property types – balancing buy-to-let properties with HMOs, refurbishment projects or multi-unit blocks.
But diversification isn’t only about asset type. Geography has always played an important role in portfolio strategy too, and the latest housing market forecasts suggest regional diversification may become an even greater consideration for investors in the coming years.
Savills’ latest regional forecasts highlight a widening divergence in expected house price growth across the UK between 2026 and 2030. While the UK market as a whole is projected to grow by 22.2% over the five-year period, several northern regions are expected to significantly outperform that average.
Savills forecasts 28.8% growth in both Yorkshire and the Humber and the North East, with Scotland, Wales and the North West each expected to see around 27.6% growth. By contrast, London is forecast to see growth of just 13.6% over the same period, reflecting the affordability pressures that continue to shape the capital’s housing market.
For investors, the message is clear: while London remains one of the UK’s most established and resilient property markets, the strongest price growth over the coming years may emerge elsewhere.
Affordability driving regional opportunity
Affordability is a key factor behind the regional outlook. In markets where property prices are lower relative to local incomes, there is typically greater capacity for growth as borrowing conditions improve and demand strengthens. This dynamic is particularly relevant after a period in which higher interest rates have constrained purchasing power across much of the market.
Lower property values can also translate into stronger rental yields for landlords, particularly when compared with markets where acquisition costs are significantly higher. For investors allocating capital, regional markets can therefore offer a balance of income generation and long-term capital appreciation.
Looking beyond familiar markets
For brokers advising landlords and property investors, purchasing outside a client’s immediate local market is nothing new. Many investors – particularly those based in London and the South East – have historically expanded into other parts of the country where property prices are lower and yields more attractive, with investment in student towns and cities being particularly popular.
However, with forecasts suggesting a widening performance gap between regions, geographic diversification may begin to play a more prominent role in portfolio strategy.
Of course, investing outside a local market requires careful due diligence. Local employment drivers, tenant demand, infrastructure investment and planning policy can all influence the long-term performance of a property. For brokers, this means helping clients assess opportunities across different regions and ensuring that investment decisions are based on a clear understanding of local market fundamentals.
Regional markets and value-add opportunities
Regional diversification can also work well alongside value-add strategies such as refurbishment. Many regional markets have a larger stock of older housing, yet to be renovated, where relatively modest improvements can significantly enhance both rental appeal and property value. For investors, this can create opportunities to purchase properties at a lower entry price, carry out targeted improvements and ultimately increase both rental income and capital value.
Refurbishment bridging can help investors fund both the initial acquisition of the property and the cost of the refurbishment works themselves before refinancing onto longer term solution. At Castle Trust Bank, our refurbishment loans offer staged drawdowns, enabling investors to access funds for the works in phases as the project progresses, rather than borrowing the full amount upfront. This helps manage project costs more effectively by reducing the amount of interest paid during the refurbishment period.
A broader approach to diversification
Ultimately, diversification in property investment is rarely about a single strategy. Successful portfolios are typically built across a combination of property types, tenant profiles and geographic locations.
While London and the South East remain fundamental parts of the UK housing market, Savills’ forecasts reinforce the idea that some of the strongest growth opportunities over the coming years may emerge in regional markets.
For brokers supporting property investors, the key takeaway is that diversification doesn’t stop at property type. Considering opportunities across different regions may help investors build more balanced portfolios that are better positioned to benefit from the varying fortunes of the UK housing market in the years ahead.
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