Buying a house in Birmingham will give you a property that is strategically located right in the centre of England, with well established – and imminent billion-pound upgrade – transport links to London and Manchester (the UK’s other big regional powerhouse). Birmingham is home to a £31.9 billion economy and the driving force of a £80 billion regional economy.
Real estate capital values in Birmingham have risen by 12% over the course of the last 12 months and by 17% since 2018.
It’s a more than fair return and the above data reflects the onset of major predicted growth. Indeed, many estimates have detailed property prices in the West Midlands will appreciate 21.7% over the next 5 years – with Birmingham city centre property prices instigating much of the growth.
This is excellent performance and reflective of the growing demand for property within the city, yet it is the potential yield available in Birmingham that is offering investor portfolios a truly notable return on investment.
Birmingham is already the UK’s second most populous city. Between 2002 and 2015, the volume of people residing in the city centre grew at a rate of 163% – only surpassed by London’s population increase. Even now, Birmingham continues to welcome over 10,000 new residents every 12 months.
Furthermore as mentioned, with strong rail ties to London, Birmingham is already the top alternative for London leavers – a title only set to solidified by the development of the HS2 network that’ll cut travel time between the two cities to less than 50 minutes.
With such an influx of young talent, the rental market in Birmingham is thriving. Even through the onset of the global pandemic, rental prices have increased by 10% and as property prices in many areas of Birmingham are still reserved, investors find a city with average yields over more than 6.5%.
Yet, this is just the start. As those UK-wide commuter links are rolled out and further national and international investment lands in Birmingham, returns are firmly set to further increase.
In fact, nowhere in the UK is set to have a higher yield growth than Birmingham over the next 5 years – which is why many people are buying right now.
As detailed, Birmingham has a large and quickly expanding population.
However, it is the demographic of this demand that is instigating much of the property performance – particularly those record yields.
Recent data suggests almost half of the city’s population is 25 years old or younger – that’s around 1.3 million people. This makes Birmingham the youngest major city in the whole of Europe. As well as the London leavers, Birmingham enjoys a graduate retention rate of 41%.
The produces a unique rental market within the city, but it is not the only factor underpinning future property investment returns.
As a city, Birmingham is also set to benefit from almost unprecedented levels of infrastructural investment over the coming years.
This is expected to have a long-term wealth effect boost on an economy that is already performing well. Over the past 5 years, data shows the West Midlands combined authority oversaw a GVA growth rate of 22.4% – one of the strongest economies of any combined authority in the UK.
Investors looking at buying a house or other property in Birmingham city centre can find strong performance across many postcodes – notably city centre, canal-side properties are currently very sought after.
With that in mind, new apartment complexes across B4 look set to enjoy both medium and long-term demand both from renters and investors.
Chestertons are experts within the Birmingham property market. We specialise in listing houses and other properties for sale that are favoured by the young, affluent rental market and have access to property in some of Birmingham’s most prestigious new developments, such as Affinity Living and Snow Hill Wharf.