Real Estate Investor Magazine South Africa Real Estate Investor Magazine - June 2017 | Page 50

BIRMINGHAM IS UNDERPINNED BY STRONG DEMAND
FOR HOUSING, BOTH FROM LOCAL BUYERS AND THOSE
MOVING FROM LONDON AND FURTHER A FIELD
• House prices in Birmingham rose by 8.2% in the year
to August, according to the latest official figures. This is
broadly in line with the average 8.4% growth seen across
the wider UK market. Birmingham was in the top ten
performing cities in Europe in terms of capital growth.
• Since 2009, prices have risen by 32%, but most of this
growth came during or after 2013, the point at which the
UK economy showed signs of sustained recovery from the
financial crisis, which prompted an uplift in confidence
among UK homebuyers.
• Sentiment in the market can also be gauged by activity
levels in the Birmingham market, with the number of homes
purchased across the city picking up sharply from 2013. The
average number of transactions each month rose to 1,162
last year, up from 714 in 2009.
• The average price of a home in the city has grown in recent
years to £162,000 with new-build units in the city centre
averaging around £181,000. Putting this in a UK context, the
average cost of a home is around 60% less than in London.
Recent data shows that Birmingham is the most popular UK
destination for those moving out of the Capital, with more
people moving to Birmingham than any other major UK city.
• The changes in Birmingham city centre over the last decade
are notable, from the final developments at Brindleyplace,
one of the largest mixed-use, re-generation schemes in
the UK, to the £600 million redevelopment of New Street
Station, one of Birmingham’s main train stations - which
runs regular train services to London taking just 1 hour and
25 minutes.
• The Metro line extension from Snow Hill to New Street has
improved connectivity around the City Centre. Further work
is slated to create additional links to the east of the city,
including Curzon Street – the station where the proposed
HS2 line will terminate – and mean that all the city’s main
railway stations are linked by Metro for the first time,
further enhancing connectivity across Birmingham.
• Ease of transport, along with schooling, safety and housing
are some of the factors considered by Mercer when it
compiles its Quality of Living index, ranking 230 cities
around the world. It is telling then, that Birmingham is
placed 53rd, meaning it scores higher than other global
cities such as Rome, Dallas, Miami and Hong Kong.
• There is more regeneration to come, all forming part of
Birmingham’s ‘Big City Plan’, which aims to transform the
city centre. This will include nearly £1 billion of investment
to regenerate the area around Curzon Street station,
including the creation of 4,000 new homes.
• The increased pressure on housing in Birmingham has seen
steady rises in rents in recent years, with stronger growth
in asking rents in the city centre. Asking rents in central
Birmingham have risen by 24% since 2009, and Knight
Frank projections, based on past rental performance,
indicate 3.6% growth in 2017 and 4.3% in 2018.
• Average house price growth across the city is forecast to
moderate slightly to 5.5% in 2017, with cumulative growth
of 26% to the end of 2021.
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JUNE 2017 SA Real Estate Investor
Knowledge industry employers like PwC, KPMG,
and Aon are sure to continue accessing Britain’s
skilled workforce.
Indeed, recent economic indicators have been
encouraging. UK GDP growth in Q3 was 0.5%,
coming in ahead of expectations and exceeding the
0.3% figure for the Eurozone. The government has
offered reassurances to car makers on EU single
market access, and the FTSE 100 equities index has
been trading above pre-referendum levels for some
time.
Birmingham remains a cornerstone of the UK’s
skilled based economy, which is why major banks
like Barclays, Deutsche Bank, HSBC and RBS have
relocated thousands of jobs to the city in recent years.
Nevertheless, with the approach of Brexit and the
changes brought about by digital revolution, we see
new industries emerging in the coming years, and
generating additional sources of demand for offices
and homes. HS2 moving closer to becoming a reality
should accelerate the pace of change.
Large-scale regeneration and new
development continues at pace, opening
up new areas and changing the very fabric
of the city
The level of development in Birmingham has been
rising in recent years, but not enough to meet the
overall demand for housing in the UK’s second city.
Against a national backdrop of continued decline in
second-hand homes being put on the market, there is
increasing pressure on the delivery of new homes to
help meet housing needs.
Based on the current levels of population growth in
Birmingham, official data suggests some 111,000 new
households will be created in the city over the next 25
years. In