A couple of weeks ago we shared the best yields in Australasia. Not your cup of tea? Too much golden sand?
Don’t worry, the UK and Europe remain top contenders for the best rental yields in the world.
As time-consuming and frustrating as it can be, purchasing a property is still one of the safest investments you can make - if done correctly, and in the right location.
That being said, this time, we explore which cities have the best rental yields in two regions - the United Kingdom and Europe.
Should you invest in property in the United Kingdom?
The United Kingdom's cosmopolitan cities are still brimming with activity and employment possibilities that continue to attract individuals from all over the world.
Naturally, this suggests that investing in UK property could be profitable and even reliable.
It also seems like the supply of rental properties is increasing at a far slower pace than the demand for them. Since supply is currently struggling to keep up, this leaves a gap in the market for more property investors.
Whilst recent increases in the cost of living, and interest rates, will put pressure on the property market, possibly this means there will be some well priced bargains entering the pool for serious long term investors, in coming months or years.
This gap between supply and demand is most obvious in cities that are constantly developing with high living standards and strong employment rates.
Since the market somewhat favours property investors and landlords (in terms of supply vs demand), the UK is still known to have high rental yields.
What is a good rental yield in the United Kingdom?
Rental yields vary across the United Kingdom and even within the same city or region, depending on the postcode.
The average rental yield of a specific location can also be significantly influenced by the rental costs associated with that area.
In the United Kingdom, a respectable annual yield is considered to be between 5% and 8%.
Consider investing in student housing - especially in London, or Bristol - for higher returns. Smaller studio flats are better value for money and are ideal for students and young professionals looking to establish themselves in a new location.
Top 10 cities with the highest rental yield in the UK
Let's discover what 10 UK cities have the highest rental yield, and therefore are potentially the most profitable places to invest in property.
Note- This list was compiled based on data from TrackCapital.
10. Norwich (NR5)-
Costessey, a town in Norwich (England), is 10th on the list with an average house price of £261,284 and an average rent of £1,934 per month.
Norwich has an average rental yield of 8.9%
9. Yorkshire (YO31)-
Huntington, a town in Yorkshire (England), has an average house price of £281,391 and an average monthly rent of £2,141.
Yorshire has an average rental yield of 9.1%
8. Southampton (SO17)
Southampton, in England, has an average house price of £223,073 and an average monthly rent of £1,709.
Southampton has an average rental yield of 9.2%.
7. Cardiff (CF37)
Ynysybwl, a village in Cardiff (Wales), has an average house price of £135,985 and an average monthly rent of £1,039.
Cardiff has an average rental yield of 9.2%.
6. Swansea (SA1)-
Port Tennant, a city in Swansea (Wales), has an average house price of £140,001 and an average monthly rent of £1,073.
Swansea has an average rental yield of 9.2%.
5. Yorkshire (YO10)-
Yorkshire is on the list again but this time, Heslington (in the city of york) has an average house price of £286,470 and an average monthly rent of £2,328.
Heslington has an average rental yield of 9.8%.
4. Newcastle Upon Tyne (NE6)-
Wallsend, a town in Newcastle Upon Tyne (England), has an average house price of £134,641 and an average monthly rent of £1,104.
Wallsend has an average rental yield of 9.8% as well (as Yorkshire).
3. Manchester (M14)-
Manchester, in England, has an average house price of £205,102 and an average monthly rent of £1,721.
Manchester (M14) has an average rental yield of 10.1%.
2. Bradford (BD1)-
Bradford, in England, has an average house price of £54,526 and an average monthly rent of £483.
Bradford has an average rental yield of 10.6%.
1. Nottingham (NG1 and NG7)-
Nottingham (city centre), in England, has an average house price of £159,083 and an average monthly rent of £1,473.
Nottingham (NG1) has an average rental yield of 11.1%.
NG7, also in Nottingham, has an average house price of £170,278 and an average monthly rent of 1,598.
Nottingham (NG7) has the highest average rental yield on this list at 11.3%.
How about Europe?
Europe is often considered to be one of the best places to invest in property due to its popularity with holiday-makers. Especially during the summer months, Europe is flooded with visitors from all over the world - eager to witness the glory of a European summer.
However, the flow on economic effects of Covid-19 seems to have left some people unsure of the profitability of property in Europe.
In addition to the obvious negative travel effects of Covid-19, there are some positive effects as well. For starters, people have been contained in the same country, and even the same house, for so long that they're bursting to get out.
One of the main reasons investors are still choosing to invest in property in Europe has been because of consistent interest rates.
Now, let's take a look at which European cities have the highest rental yields...
Top 10 cities with the highest rental yields in Europe
Note- Most of the information below was retrieved from here.
10. Zagreb, Croatia-
Zagreb is the transport hub of Croatia.
Zagreb has an average rental yield of 5.43%.
The average price per square metre is €2,177, and the average monthly rent is between €510-€900 in the city centre and €380-€630 outside the city centre.
9. Lisbon, Portugal-
Lisbon is one of the oldest cities in the world, and is the oldest city in Western Europe.
Lisbon has an average rental yield of 5.45% (some areas up to 6%).
The average price per square metre is between €2000-3000, and the average monthly rent is between €960-€2000 in the city centre and between €680-€1,100 outside the city centre.
8. Warsaw, Poland-
Warsaw is the largest city in Poland and is also its capital city.
Warsaw has an average rental yield of 5.5%, and in some areas the rental yield can be uo to 6%.
The average price per square metre is €3,957 in the city centre and €2,600 outside the city centre. The average monthly rent is between €600-€1000 in the city centre and between €500-880 outside the city centre.
7. Bucharest, Romania-
Bucharest is the capital city of Romania and is famous for having one of the fastest internet connections in Europe.
Bucharest has an average rental yield of 5.88%. However this value can be as high as 8% depending on the specific area.
The average price per square metre is €2360 in the city centre and €1460 outside the city centre. The average monthly rent is between €450-€860 in the city centre and between €320-€530 outside the city centre.
6. Seville, Spain-
Spain is the second most-visited country in Europe, following France. Seville, in particular, is an attractive investment location as it offers higher rental yields than other better known cities in Spain (Madrid and Barcelona) whilst matching their increase in property value.
Seville has rental yields of between 5.1%-6%.
The average price per square metre in Seville is €2547, and the average monthly rent is between €650-€975 in the city centre and between €425-€715 outside the city centre.
5. The Hague, Netherlands
The Hague is the Netherlands seat of government and is definitely an international city with millions of corporate travellers each year.
The Hague has rental yields of between 5.6%-6.4%.
The average price per square metre in the Hague is €2,220, and the average monthly rent is between €1080-€1,785 in the city centre and €845-€1,400 outside the city centre.
4. Porto, Portugal-
Portugal is a great place for foreign investors to purchase real estate, especially due to its Non-Habitual Resident (NHR) tax programme. This scheme offers tax incentives to foreign property investors, such as fiscal residents of Portugal (foreign investors who apply for NHR) aren't taxed on any income they obtain from outside Portugal (including pensions).
Porto has rental yields of between 5.7%-6.8% and demand for housing is increasing (over 15% increase in 2018).
The average price per square metre in Porto is €3,057, and the average monthly rent is between €700-1300 in the city centre and between €540-900 outside the city centre.
3. Podgorica, Montenegro-
Podgorica is the capital city of Montenegro.
Podgorica has an average rental yield of 7%.
The average price per square metre in Podgorica is €1350, and the average monthly rent is €583 in the city centre.
2. Murcia, Spain-
Murcia is a university city and has the highest rental yield in Spain.
Murcia has an average rental yield of 8.1%.
The average price per square metre in Murcia is €1,655, and the average monthly rent is between €600-€750 in the city centre and between €450-€580 outside the city centre.
Note: Kiev, Ukraine-
We thought it was worth adding Ukraine to the list as before the conflict with Russia, Kiev had a gross rental yield of 9.09%!
This would place Kiev as second on the list, however keep in mind this information is no longer relevant or accurate.
1. Chisinau, Moldova-
Chisinau is the capital city of Moldova and is the country's commercial centre.
Chisinau has average rental yields of between a whopping 11%-13%.
The average price per square metre in Chisinau is €1,096 in the city centre and €776 outside the city centre. The average monthly rent is between €295-€540 in the city centre and between €220-€400 outside the city centre.
If you missed out on the first part of this series, "Revealed: Best Property Yields in Australasia," or if you want to read it again - click here.
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