More investors are looking to outer London, Manchester, Birmingham and other regional cities in a ‘flight to affordability’, according to a new report by property investment firm IP Global.

Population growth in London is placing extreme pressure on housing supply, with rising numbers of people finding new pockets of value in the outer suburbs. This in turn is increasing demand and driving significant price growth.

Property in London Zones 1 and 2 performed particularly well in the wake of the financial crisis, rebounding much more quickly than other asset classes. Islington house prices for example, increased by 62% between 2009 and 2016, compared to 28% in prime central London. This means if you bought a flat in Islington in 2009 for £350,000, it would now be worth £567,000.

Yet IP Global says that undervalued regional cities such as Manchester, Birmingham and Liverpool are now driving a new wave of investment. This has been propelled by the £7bn Government-led Northern Powerhouse scheme and infrastructure projects such as High Speed 2 and TransNorth.

Hamish Pound, investment manager at IP Global, said: “Property investment in places like Manchester, Birmingham and Leeds are providing strong returns, both capital and rental returns, as well as being much more affordable. The average company relocating from London to cities in the North of England will save on average over £20,000 per employee, per annum.”