UK property: where’s hot and where’s not?

February 5, 2018

Recent government data show that the number of property sales in London have fallen 20% in four years, with the biggest fall in the last two years. Given the overall property market remains active, if not a bit subdued, who are the winners?

Home buying has picked up in the Midlands and the north of England, highlighting how regional pockets of housing demand are still buoying the market. Buying levels were up 13 per cent in the North West between 2014-7, and 9 per cent in both the West Midlands, Yorkshire and the Humber.

Birmingham city centreOther regional markets that experienced price growth in recent years — the South East and East of England — also saw a drop-off in activity, although not at the levels witnessed in London.

London appears to have been disproportionately hit with the combination of prices having reached unaffordable levels, alongside stamp duty tax changes for more expensive homes and for buy-to-let investors too. Whilst concerning, given the diversity of the London property scene with its own micro-property markets, which do not always move in tandem, there are always areas on the up.

The gap between asking and selling prices was widening in the south of England while narrowing in large regional cities in the north and Midlands, like Birmingham and Manchester, where sales prices are more realistic.

Birmingham benefits from the property investment migration

There is a lot happening in and around Birmingham to whet the investor appetite. There has been regeneration in Birmingham, including New Street Station – the £600 million Gateway scheme which has helped regenerate parts of the city centre including Digbeth and Smithfield.

With High Speed Rail (HS2) being brought directly into the heart of Birmingham, significant investment around the HS2 Curzon Street station – connecting Birmingham with London, will underline emphatically its position as one of Europe’s leading cities. This complements the work already underway with big road improvements, in tandem with the Metro link extensions connecting the inner city to other satellite towns like Dudley.

Birmingham property market

Land Registry shows prices are rising, with steady annual growth of over 5%. Upward pressure on prices looks likely to continue as demand forecasts are almost double the levels of anticipated supply over the next three years. With HS2 (High Speed Rail) coming to Birmingham in 2026 this will only serve to buoy the local economy and its property market further, with predictions of average annual price growth of over 6%.  Even with this steady growth, the average cost of a home in Birmingham is still around 60% less than one in London. Rental growth of 4% per annum is expected, but this is likely to be significantly more in the central parts of the city.

The recent announcement that Birmingham is confirmed as the 2022 Host for the Commonwealth Games has just been the icing on the cake. As far as Infrastructure is concerned there is a dizzying array of strategic initiatives which have already completed, or are underway.

NB: Source FT/ Residential Analysts using Land Registry and HM Revenue & Customs data

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