Back in July last year we looked down the lens at Birmingham’s property market, the state of play and how it was shaping up for 2020. At the time, the city was in a state of transition, experiencing rapid market growth, amid a booming population as the most popular destination for young professionals leaving London.
Birmingham was on the up. With an outlook for 2020 described as “extremely positive”, market projections painted a favourable picture for one of the UK’s major economic hubs.
As economic and political forces collide against the backdrop of the COVID-19 pandemic, we once again look at the state of play for Birmingham’s property market, its tendency for resilience and what the future holds.
Plotting the recent history of the West Midlands and, more specifically, inner Birmingham, you’ll find a central economic destination that’s long had to stand on its own two feet.
With competition from London and a fast-growing North, Birmingham has often found itself underappreciated despite its achievements. However, by the end of 2019, the city was experiencing a renaissance, with Paul Faulkner CEO, Greater Birmingham Chambers of Commerce proudly announcing that “Birmingham is on the precipice of a triumphant return to the world stage”.
“Perceptions of the city are now changing in recognition of its young, diverse population, a strong services sector, and vibrant start-up and digital tech ecosystems,” Faulkner stated in the Birmingham Economic Review 2019. “Not only is inward investment the highest outside of London, but Birmingham’s visitor economy is breaking records year-on-year”.
With the Big City Plan and HS2 among major schemes transforming its infrastructure, alongside growing demand for jobs and a strong track record on foreign direct investment (including the highest inward investment outside of London), Birmingham was booming.
Rather suddenly, investors were beginning to take more notice and the city’s property market was being mentioned in the same breath as London and Manchester.
JLL’s West Midlands Residential Forecast 2019 revealed fierce competition for new homes in the city, projecting house price growth of 16% by 2023.
Meanwhile, Knight Frank research showed population growth of nearly 10% over the last decade, with an additional 100,000 people living in the city. It highlighted growth in property price (up 52% since the post-crisis trough in 2009), rental costs and housing stock supply.
It also pointed to recent forecasts from Oxford Economics which suggested more than 3,300 additional households would be created every year until 2030.
Through determination and hard work, Birmingham made its way back firmly onto the radar of buyers and investors.
2020 has presented a unique political and economic challenge for business, with property markets across the globe experiencing tides of downturn, and subsequent upturn, as restrictions have flexed to fight the impact of the coronavirus pandemic.
However, it’s not all doom and gloom, as the UK property market has once again proven its resilience, picking up where it left off once lockdown was eased.
Boosted by the government's temporary stamp duty holiday and a change in buyer behaviour coming out of the other side of lockdown, the UK is in a post-lockdown ‘property boom’. Rightmove celebrated its busiest month for home buying since its records began 10 years ago in July, with £37bn worth of property sales agreed during the month.
With nine out of 10 buyers looking to benefit from the stamp duty holiday, there has been a rush of activity in the UK buy-to-let market, according to mortgage lender Skipton International, as investors look to cash in on the savings.
And as investors look at where best to put their money, Birmingham keeps appearing at the top of the list.
The youngest city in Europe, with 40% of the population under-25, Birmingham has a huge requirement for homes, something that won’t change despite the backdrop of COVID-19 or Brexit. According to the Birmingham Deloitte Crane Survey, the city centre residential sector maintained record levels last year, with 5,000+ units under construction.
Birmingham’s reputation as an education and business hub means that it continues to poach young talent from the capital and elsewhere around the UK, with a Knight Frank report showing that the city welcomed the highest number of people leaving London in 2018, beating Manchester, Leeds and Bristol, with the majority of those migrating from the capital falling in the 20-29 age bracket.
Meanwhile, office space completions climbed to an all-time high in 2019, delivering 775,000 sq ft, 250,000 sq ft higher than the previous record, as the city creates space for new names in business, joining the likes of HSBC and PwC.
The city has seen house price growth of 2.9% year-on-year according to the latest HomeTrack UK House Price Index, higher than the UK average of 2.6%.
Birmingham is in a fantastic position to bounce back and continue on its upward trajectory in 2021, with a robust property market which is stimulated by its growing young population.
In fact, the city’s population is anticipated to grow to 1.2 million by 2038 according to the City Council, giving room for the Birmingham property market to grow, and prices to rise.
According to JLL’s Living with 2020 Vision: UK City Centre Forecasts, the West Midlands economy is in great shape and forecast to grow by 2% annually over the next five years, outpacing other key regions including London and the South East.
And this positive economic upturn will have a knock on effect in the local property market, with Birmingham set to see one of the strongest rates of growth in terms of rents and house prices of any UK city over the next five years, at 15.9% and 16.5% respectively.
Business is firmly on the agenda for Birmingham, and its strong performance up until now seems unlikely to be knocked off course long-term, with an exciting pipeline of new schemes and future investment.
Are you looking to purchase a buy to let property in an up and coming area of Birmingham? Get in touch with the team today to find out more about opportunities in the city.
Alliance House, WestPoint Enterprise Park
Trafford Park, Manchester M17 1QS.