Birmingham City Centre postcodes have an average property price nearly 5 times lower than that of central London postcodes.
By comparing and contrasting some of the top locations across London and Birmingham, we found that despite having a similar percentage of degree educated workers, Birmingham property is nearly five times cheaper and provides a much higher average rental yield.
With an average property price of £192,627, the B3 postcode in the second city can command a yield of 5.40%. Combined with a predicted property price growth of 20% – 30% over the next 5 years, you can see how the Birmingham property market is experiencing a boom and attracting highly educated graduates into the fold.
Now compare this with London postcodes such as EC4 and N6, which have average property prices of £926,359 and £940,132. These areas can only produce a rental yield of 3.20% and 2.10% respectively, despite N6 having the exact same degree of educated people and an average higher salary.
This isn’t just relegated to the property market. Birmingham is also driving growth commercially and within the education sector, as more degree-educated workers stay for the job opportunities springing up around the city. With around 65,000 students in the city at any time, there’s a huge potential graduate pool that is highly sought after by employers.
You’d be right in thinking that it’s not all about a degree education. We thought the same thing too. But consider that properties in B3 are also generally bigger than any EC postcode, with a higher number of average bedrooms.
Salaries in the Capital are obviously higher, with the average full-time worker in Westminster earning roughly £150 a week more than in Birmingham. This only increases as you start looking closer to the central and financial areas of London.
It’s this gap in current property prices, employment opportunities and potential tenant demand for Birmingham that should appeal to investors. The second city is projecting steady growth and Birmingham property is still very affordable when compared to other regions. As the city develops a more educated workforce that can command higher wages, combined with a rising popularity in city centre living, residential property in areas such as B3 will grow exponentially in terms of both property value and rental yields.
You can also factor in the completion of HS2, which will effectively transform Birmingham into a commuter location. This opens up Birmingham to a whole new market, bolstering demand and ensuring that any property in the city centre is highly sought after, particularly by London workers who want to avoid London property prices.
Data Source via PropertyData
Salary Source: ONI