Birmingham housing market is highly active

Making Waves In The Midlands

19.07.19

Birmingham: Property Market Insight, a new report on Birmingham’s property market published by Dataloft, the research intelligence group, commissioned by Galliard Homes, says that over the last 12 months, house prices in Birmingham have increased by 5.3% compared to a rise of 1.3% in the South East and -0.6% in Greater London.

The new report adds that the local Birmingham housing market is highly active with properties selling on average ten days faster than in any other parts of the country. Since 2011, there have been 3,464 new flats sold in the city centre with 94% of homes in the central district being flats and 61.5% being privately rented.

The report says that given the 40% reduction in journey times to London, to just 49 minutes, due to the HS2 link set to open in 2026, the medium and long-term outlook for house prices in Birmingham looks positive. The new HS2 line will act as another driver for the Birmingham economy, following on from the city hosting the Commonwealth Games in 2022, as well as city centre commercial regeneration schemes such as Paradise Birmingham.

The research report also reveals that the city’s urban regeneration policies of the early 2000s have transformed the city centre, resulting in repopulation from other cities such as London.

Over the last five years the report reveals that, the number of new flats sold in Birmingham’s city centre has averaged 547 per year. The average price achieved for new flats in the city centre has been on an upward trajectory since 2009, with values rising by 103% over the last ten years to an average of £231,902 in 2018.

The report highlights that London developers have been investing and building in Birmingham, delivering a London-style product, but at local Birmingham prices. The report says that the price for a new build flat in London’s Shoreditch starts at £1.02 million, compared to just £220,600 for a one bedroom new build flat at Timber Yard, Birmingham, a new development by Galliard Homes and Apsley House Capital, which offers a London level specification, demonstrating the value for money provided to investors in Birmingham.

The report says that the top 25% of all new flats by value in Birmingham’s city centre represents the location’s prime market. In 2018 the minimum price threshold for the top quartile stood at £225,500. Apartments in Timber Yard’s West Block start at £189,995 for a studio, £212,500 for a one bedroom apartment and £307,500 for a two-bedroom apartment. These prices place them firmly in Birmingham’s prime market.

The report highlights that buyers have been attracted to these new homes because of capital value growth and the fact that rental values for prime property in the city centre are performing strongly, rising by 4.8% in 2018 to £231,902.

Birmingham offers investors attractive yields at 4.5% for the local city centre compared to a London average of 3.3% in 2018. The city has bias towards younger age groups in its population profile and therefore in the centre private rented is the dominant tenure.

Under 25s accounted for nearly 38% of all of Birmingham’s population in 2018. This data can be partly attributed to the growth of the city’s universities and its high graduate rate of 49%. The average rate of tenants in the city centre over the last 12 years is 27 years of age. With such a young population, 25% of income in Birmingham is spent on rent, compared to 37% in London.

Capital values are playing catch up with London and the South East in locations with strong local currencies, such as Birmingham. Weak sterling, resulting in uncertainty surrounding Brexit, presents a further incentive for overseas investors, with favourable exchange rates resulting in savings of just over 9%.

Timber Yard is a development of highly specified studio, one, two and three bedroom private sale apartments located just minutes from Birmingham New Street Station, the city’s cultural heartland and the site of a proposed leisure and market square redevelopment called Birmingham Smithfield.

Launched towards the end of 2018, Galliard Homes have sold over 200 of the apartments at Timber Yard, equivalent to a sales rate of 33 units per month, with the apartments selling to a combination of UK and overseas buyers, including owner occupiers, second home owners and rental investors. Coinciding with this data, the Mercer Cost of Living Index reveals that Birmingham has fallen seven places to 135 in the ranking of the world’s most expensive cities, meaning it is now cheaper to live in Birmingham compared to London which is ranked at number 23.

The sales at Timber Yard have achieved figures of up to £480 per sqft, with entry prices starting from £189,995 and buyers attracted by the high quality of Galliard’s specification and the design of the homes.

Birmingham’s city centre has undergone a transformation in the last twenty years into a major European retail, leisure, cultural and business centre. With investment still taking place, it is now coinciding with a shift in the regional balance of house price growth, away from London and the South East to the Midlands.

The new report insight states that £1.3 billion pounds is being invested into Birmingham by Midland Metro Alliance over the next 20 years. This investment has created a light train/tram network connecting Birmingham and Wolverhampton that is now up and running, with a linking tram in the pipeline that will travel to Edgbaston through Centenary Square.

The report also outlines Birmingham’s boost in its economy, ranked as the fourth strongest city centre in England and Wales. Birmingham boasts a £120 billion economy, it is an entrepreneurial hotspot with 8.16 enterprise births per 1,000 of its population, almost double that recorded in 2014.  Birmingham continues to attract the most UK inward investment outside of London, important in job creation as in quarter one of 2018, Colliers ranked Birmingham top of their Cities of influence across Europe.

The report says that schemes such as Timber Yard will provide the lifestyle offering that is often lacking in regional cities. Companies will therefore welcome high calibre new homes like this especially firms in the business, financial and professional service sectors who are looking to attract and retain high quality staff.

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