Birmingham Property Price Forecast Shows Steady Growth Across UK Market
Birmingham Property Market Price Forecast 2019/20
Last year, Birmingham ranked as one of the best cities in the UK in terms of property price growth, comfortably outranking London. Since 2009, Birmingham has experienced a 45% rise in average residential property values – we take a look at the Birmingham Property Price Forecast for 2020.
Thanks to its relative affordability in comparison to other regions, coupled with a number of key developments including the HS2, Knight Frank has Birmingham property forecasting excellent price growth from 2018 into 2020, cumulatively adding up to a 14% increase.
According to the Knight Frank Birmingham Residential Market Insight Report 2018, the annual growth rate for Birmingham property has averaged between 5% and 10% since 2015, outperforming most of the UK market.
Birmingham is also quickly becoming the most popular destination for those leaving London, with more people choosing the second city over Manchester, Leeds and Bristol. Unusually, a large proportion of movers are young professionals and families seeking affordable living costs alongside great amenities and lifestyle.
This price differential is one of the key factors of the Birmingham market. Despite drawing comparisons with London in terms of lifestyle, the difference in development prices is stark – with the average new-build price sitting at £300 – £450 per sq ft in central Birmingham compared to £1,000 – £2,000 per sq ft in central London. For investors, it’s a great time to get into a market that is not showing signs of slowing.
The Big City Plan
The Big City Plan is one of the driving forces behind this incredible growth and the positivity in the Birmingham Property Price Forecast for 2019. A major development plan set out over 20 years, The Big City Plan includes developments across key areas in the city and is set to increase the size of the city core by 25%, improving transport connectivity and providing 50,000 new jobs. It’s this vision being realised that makes Birmingham such an attractive prospect for investors.
Covering several key districts throughout the city, the Big City Plan includes upcoming projects such as Paradise, Arena Central and HS2, as well as completed projects like the redevelopment of New Street Station, Grand Central, Birmingham Library and more. With Birmingham already boasting the largest business, professional and financial services hub outside of London in the UK, there’s plenty for the second city to shout about.
No fear of Brexit for Birmingham
When it comes to property investment in the current Birmingham climate, the signals are positive. Despite warnings of the ‘economic carnage’ Brexit would bring, the UK economy is still growing, with an increased focus on regeneration in regional cities north of the capital. Although the initial prediction of 1.4% growth across the UK for 2018 (Knight Frank, p.4) is lower than standard, it’s certainly not disastrous.
In fact, Birmingham enterprise is showing a much more positive picture, with the number of active businesses up by 13.5% on 2016 levels, accelerating at three times the UK growth.
Demand for homes is also high and only set to increase as Birmingham is being forecast a population growth of 12% by 2032.
It helps that Birmingham is the youngest city in Europe, 40% of the population is under 25 years old, which means a dual demand of existing residents looking for new space while younger buyers move out of the parental homes. Experts estimate that Birmingham will need to build 80,000 new homes over the next decade to meet this residential demand.
The HS2 Effect – What impact is it having on the Birmingham Property Price Forecast
With HS2 around the corner, it’s not a stretch to say that Birmingham could become the perfect destination for London workers who are looking to escape the high cost of living.
When HS2 starts running in 2026, Birmingham will effectively become a commuter town overnight as journey times are cut in half. The idea of affordable living in Birmingham with a commute that takes less than 50 minutes will likely be highly attractive for many professionals and families currently living in London, further increasing the demand for residential property.
As the HS2 stretches on to the North-West several years after that, Birmingham could quickly become the central transport hub of the UK.
Professional opportunities have never been higher
With four universities and a student population of 65,000, Birmingham has a wide pool of graduates to choose from when it comes to degree-based industries.
Offering more affordability for both current students and graduates that are looking to stay in the area, Birmingham is also quickly becoming the UK’s tech hub. For the fifth year in a row, Birmingham has been named the top regional city for startups outside of London, with 12,108 businesses set up. This is almost 4,000 more than the third-placed Manchester.
With all of these opportunities available, demand is rising and the average rental yield for Birmingham property is hitting anywhere between 5.9% and 10.8% at any given time. As development projects begin to complete and with the arrival of HS2, these yields could skyrocket as tenant demand and average rent costs increase.