‘Levelling Up’ the government’s signature policy for boosting economic growth in the Midlands and North is still without a Blueprint. Although the Department for Levelling Up, Housing and Communities, headed by Michael Gove has promised one soon.
‘Levelling Up’ included an integrated rail plan for the North and Midlands. However the scrapping of the Eastern leg of HS2 from Birmingham to Leeds and the connections between Leeds, Bradford and Manchester has created doubts. How easily can levelling up be achieved?
Casting an eye over the current economic statistics, they reveal a wide variation in productivity and performance across the country. This is not just about the ‘left behind’ or forgotten mining communities. Our main regional cities are under performing.
The greater South East is one of the most productive parts of Europe. Whilst the UK’s largest cities outside the South East are responsible for the UK’s poor productivity. This includes Birmingham, Manchester and Glasgow. What’s more the UK’s regional cities compare unfavourably with their counterpart cities in Continental Europe (Policy Thinktank Centre for Cities).
This is puzzling given some of these cities have been revamped in recent years and injected a degree of diversification into their micro-economies.
One issue appears to be ineffectiveness in building higher productivity and exporting businesses in trading sectors. This is where innovation can be generated and retained in the local economy. Instead many regional cities revolve around service industries like entertainment and leisure. These give a buzzing feel to a location but not always an enduring economic upturn.
Creating genuine regional autonomy to drive innovation and attract private sector investment, is going to be important for the Levelling up agenda.
Why is all of this important for you?
An important consideration for you as a property investor is how well a local economy is doing and therefore how attractive the local housing market is. Not to mention how infrastructure improvements enhance the standing of an area.
How are property investors affected by Levelling Up?
So when you see signs that the ‘Levelling Up’ agenda is going to make a difference and create fundamental change rather than cosmetic changes to our Regional cities, that will be a moment to benefit.
Not all infrastructure investment works well. Take the Freeport status, conferred on eight cities and towns in the Spring Budget. Heralded as boosting the nationwide economy though lower tax regimes. The OBR’s analysis suggests this simply alters location choices, rather than boosting the overall national economic picture.
How to Navigate the Property market?
In the property sector the much-anticipated increase in mortgage interest payments, may just be around the corner. Many of you younger investors and homeowners may not remember the time mortgage interest rates rose to over 15% in the late 80’s. So whilst we aren’t entering those realms necessarily, the interest rate rises will be the biggest since the financial crisis. The OBR expects the Bank of England to raise the Bank Rate from 0.1% to 0.75% by the end of 2023, which will translate through to mortgage repayments.
This is a time to take stock and not mortgage to the hilt, whether you invest or are home-buying. Rates can go up as well as down. And consider locking into a predictable low rate now.
‘Levelling up’ Implications for you property investors in summary
Some regional property markets have benefited from decent capital uplift because of investment in the inner city centre areas, but more could still come in the major centres like Manchester and Birmingham if the Levelling Up Agenda addresses the fundamental issues.
London has been the engine driving the economy but even its productivity growth has been stunted since the financial crisis. So invest in areas with an eye on current economic performance and future growth prospects in mind.
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My business focuses on helping time-strapped expats and busy business people who don’t have the local presence, or capacity, to acquire the ‘right’ properties for them. Property Venture® is an award-winning, Boutique property consultancy that finds the right investment properties for clients investing at distance.
Inspired by a Sunday Times article written by David SmithTags: Capital uplift, Infrastructure, investment property, Regional cities