Properties located in areas with high rental demand command a significant price premium, recent market analysis from Benham and Reeves has revealed.

The letting and sales agent analysed average house price data in England’s high rental demand areas and compared it to the wider average house price in each region.

The demand for rental properties has remained strong, with yields of up to and above 5% over the past five years.

Across England, the average house price in areas of high rental demand was £372,055. This represents a premium of 23% (£69,662) compared to the nation’s wider average house price of £302,393.

In the North West, the average house price in high rental demand areas was £289,863, a premium of 33% (£72,338) compared to the region’s overall average price of £217,525.

In the North East, the high rental demand house price premium was 30%, while Yorkshire and the Humber had a premium of 29%. The premium also exceeded the national average in the South East (28%) and West Midlands (25%).

In the East of England, where the high rental demand price premium was at its lowest, homes still sold for an average of 15% above the wider regional average.

Additional analysis showed that high rental demand areas offered landlords an average yield of 5.49%, versus 5.15% in non-high rental demand areas.

Across England, there were an estimated 24,857 properties located in high rental demand areas available on the market. The highest proportion was found in the South East (21%), followed by the East of England (18%), South West (17%), North West (12%), East Midlands (12%), West Midlands (10%), Yorkshire & Humber (7%), London (2%), and the North East (1%).

Marc von Grundherr, director of Benham and Reeves, said: “Things may not have been easy for buy-to-let landlords in recent years, as increased rules and regulations have been implemented to reduce the profitability of the average investor’s portfolio.

“However, it remains a strong and reliable investment, with long-term stability that often cannot be matched by other more volatile investment asset classes such as stocks or collectables.

“Of course, where you invest is as important as what you invest in and identifying high demand areas is vital when maximising the returns available.

“What’s more, investing in a high rental demand area is also likely to protect the value of your investment in the long run, with properties in these locations commanding impressive premiums when compared to the wider region.”

This data highlights the substantial premiums and stable yields associated with high rental demand areas, making them attractive investment opportunities for landlords.