Inflation-beating capital growth and rental increases are fully justified
Property prices are growing fast in Birmingham. With a rise of 5.9% over the last year, house prices in Birmingham are outpacing most of the UK’s top 20 cities and rising at almost double the rate of inflation. It makes Birmingham one of the UK’s current property hotspots.
The Emerging Trends in Real Estate 2017 report produced by the Urban Land Institute and PwC concludes that Birmingham is the UK’s number 1 hotspot. We think it could remain so for many years.
In this article, you’ll learn why we’re so confident about the prospects for off-plan property investment in Birmingham.
Property prices in Birmingham are trending up
Hometrack’s latest data release shows average property prices across the country are rising only a little above inflation. However, this average number is skewed downward by the weight of London properties in the index. In the capital, the average price rise over the last year was 2.3%.
Looking beyond London, Birmingham is one of the star city performers. It is beaten only by Edinburgh and Manchester. These cities benefit from factors such as attractive affordability, and values that are increasing from a low base. Some market observers, such as Richard Donnell at Hometrack, expect the rate of house price growth to slow. He said, “The rate of growth is expected to moderate around its current level and will be tempered by economic and sentiment factors such as the squeeze on incomes from rising inflation and concerns over the economic outlook. Talk of a possible increase in interest rates and any knock-on effect for mortgages is also likely to temper demand further.”
All valid reasons to be more selective when deciding where to buy off-plan property. But while the rate of price rises may slow in the short term in many cities, the outlook for Birmingham’s property market is nothing short of spectacular.
As property investors shift their capital away from London, Birmingham really could be the main beneficiary.
Regeneration and repositioning
Birmingham is a city endowed with all the fundamentals that make it a great place to invest in property. It has great schools and universities. Its economy is thriving, and investment is high. Firms like Burns & McDonnell (a power and infrastructure specialist headquartered in the United States) are setting up shop in Birmingham. They are attracted by Birmingham’s position in the market today, and its prospects for tomorrow.
With such a large, diverse, and well-educated population, Birmingham offers a great employee base for firms like Burns & McDonnell, which work in New Age industries such as renewable energy.
Birmingham is also repositioning as a fantastic geographical location for businesses to set up and people to live. For example:
- Office and factory space is cheaper here than in London, yet the city is within four hours of 90% of the UK’s population.
- Birmingham City Airport flies people and freight to all corners of the world and is expanding rapidly.
- When HS2 becomes operational, Birmingham will become a commuter destination for residents and workers in London – more affordable housing, and yet only 50 minutes from London by HS2 train.
The city has been gearing up to face the challenges and opportunities presented by these factors. Heavy investment in infrastructure and regeneration is being made. The tramline has and is being extended to make it easier for people to travel into Birmingham from surrounding city boroughs. Regeneration projects include provision for thousands of homes in key sites away from the city centre, including:
- Greater Icknield
- Aston, Newtown and Lozells
- Bordesley Park
- Selly Oak and South Edgbaston
In and around Birmingham, regeneration projects to date include £1 billion pumped into the Southern Gateway, £600 million spent on redeveloping New Street station, £900 million around the planned Curzon Street station, and £500 million on the Birmingham Smithfield project.
The amount of money committed to the planning conducted in Birmingham is colossal.
Birmingham city centre is a highly attractive place for people to live, work, and play. It’s ideally suited to young professionals, but quality development sites are in short supply. Demand is still outgrowing supply of homes in Birmingham and could continue to do so. Rents increased by 4.9% in 2016 and may do similar this year.
As the arrival of HS2 draws nearer, property prices on the outskirts of the city and in the suburbs are likely to benefit from increased demand. We’ve searched for the negatives for property investment in Birmingham, and can’t find them. We’ve rarely been this excited about the prospects in property investment across a whole city region.
Investors in off-plan property in Birmingham could be handsomely rewarded with substantial capital gains and income-enhancing rental income upon completion. To discover the best investment opportunities in this growing city, contact one of the Gladfish team today on +44 207 923 6100.
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