How will HS2 really affect property prices and investment potential?

It’s a major infrastructure, but is it a major profit opportunity?

One of the questions we get asked often is how HS2 is likely to affect property prices. The short answer is that it should be positive, and we’re already seeing evidence that it will be. The full answer is much more detailed.

In this article, you’ll learn why we’re bullish about property prices along the route of HS2. You’ll also find out how to get our detailed analysis of HS2 property opportunities.

What is HS2?

HS2 is the second phase of the UK’s high-speed rail network. It promises to transform rail connectivity between the north and south, and is a major infrastructure project at the heart of creating what has been called the ‘Northern Powerhouse’. It will run in a Y-shape, from London in the south to Birmingham in the Midlands, before splitting north-west to Manchester and north-easterly to Leeds.

As infrastructure projects go, this is huge – a £56 billion-plus investment enhancing rail, road, and regeneration. The first phase, due to connect London to Birmingham, is due for completion in 2026, with connectivity to Leeds and Manchester completed by 2032.

How will HS2 affect local economies?

It cannot be denied that HS2 is likely to have a major effect on local economies and daily lives along its route.

We are already witnessing people and businesses repositioning themselves. Perhaps not surprisingly, Birmingham is proving to be a primary beneficiary already. HMRC has moved operations here, and there have been a number of companies that have moved either some or all of their business out of London.

Most notably, this includes Deutsche Bank and HSBC. The financial sector in Birmingham is one of the fastest-growing in the UK, and the city looks set to overtake Leeds as the UK’s second-largest financial centre after London.

It’s not only financial businesses that are growing in Birmingham. Thousands of jobs are being created here across a swathe of industries, many of which operate in the new-age economies including technology, digital, creative, and health sectors.

Leeds and Manchester are also witnessing business investment, and it should be expected that this will increase as we near the start of HS2 services.

People will relocate for jobs and lifestyle

HS2 could alter the commuter belt for London, too. Instead of thinking of journeys in terms of distance, workers may start thinking about journeys in terms of time.

Currently, the typical commuter journey is from towns in nearby Kent, Essex, Hertfordshire, and Surrey and Sussex. The average distance travelled is no more than 40 to 50 miles, and, according to the ONS Labour Force Survey 2007 to 2016, the average time travelled per day is two hours. In fact, almost one million people travel this time every day to work in London.

Living in Manchester, Birmingham or Leeds has not been an option for London’s commuters. Until now. HS2 could redefine the commuter belt:

  • Leeds to London will be a journey of 1 hour 28 minutes (down from its current 2 hours 20 minutes)
  • Manchester to London will take just 1 hour and 8 minutes (down from 2 hours and 8 minutes)
  • Birmingham to London will take just 49 minutes (reduced from 1 hour 21 minutes currently)

Property prices and rents are far more affordable in Birmingham, Manchester and Leeds. Certainly, Birmingham will find itself in the commuter territory, thus increasing demand for property from homebuyers and renters. Young professionals are likely to want homes in the heart of the city, as near to the HS2 station as possible.

This extra demand is already having an effect on property prices in Birmingham. We’re seeing good demand from investors wanting to buy off-plan property within walking distance or a short bus ride away from Curzon Street. These investors are making their move now, to capitalise from the advantage of getting the biggest discount on off-plan property investment.

How much might property prices increase along HS2?

This is like asking how long a piece of string is. No one knows for certain. However, what we can say is that major infrastructure projects tend to increase property prices, and this is especially true of rail projects.

If we look at Crossrail as an example, house prices along its route increased by 30% to 60% more than house prices away from the area of immediate impact (within a 10- to 15-minute walk). And while price rises happen leading into the start of operations, when services start to flow there will probably be another boost to values.

It could be that HS2 boosts property prices across the North. The government has forecast that the North will benefit from 70% of the new jobs created because of HS2. That will build affluence and population, as people move for jobs. More money in the system and more people wanting homes is a sure-fire way to put upward pressure on demand for homes and, therefore, house prices.

And just how big a deal could HS2 be for jobs in the North? As an idea, Business Birmingham has estimated that 91,000 new jobs could be created in the surrounding development areas around the HS2 stations of Birmingham Interchange and Curzon Street. Make no mistakes, the kind of economic growth and transport advantage that HS2 could give the North could provide the biggest potential profits for property investors that the UK has ever seen. It could be a once-in-a-lifetime opportunity.

Do you want to find out more? Click here to download your free hotspots research report ‘High Speed 2 – HS2 Property Investment Opportunities’. It provides in-depth detail including:

  • Economic growth analysis
  • Lessons from Europe
  • How HS2 impacts the regions
  • Themes for investment decisions
  • Why HS2 is a magnet for business
  • Where smart HS2 investors will go

Alternatively, contact one of the Gladfish team today on +44 207 923 6100 and book a property strategy session to discover how property investment in HS2 locations could benefit you personally.

Live with passion

Brett Alegre-Wood

Brett Alegre-Wood
July 27, 2018

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