Birmingham Market Update 2018

Birmingham has one of the UK’s largest economies, a fast-growing population and a strong pipeline of new development.

Bars and restaurants are popping up, while recent regeneration is underpinning a bright outlook for the one of the UK’s powerhouse cities.

Large-scale regeneration and development has contributed to outperformance in the city’s property market, with the annual growth rate for residential values averaging between 5% and 10% since mid-2015, according to data from the ONS.

The strong growth rate in prices seen in the past few years has contributed to a 45% rise in average residential property values since the post-crisis trough in 2009.

Even with this level of growth, the average price in Birmingham is around £178,000, notably lower than the UK average.

This price differential underlines just one of the key drivers of the Birmingham market – its relative affordability compared to other areas of the UK, especially those in the south of England.

As the UK’s second-biggest business hub, Birmingham draws comparison with London, the financial centre of Europe.

However, when looking at residential property prices, the difference is striking, with new build development prices in some central zones of the capital ranging from £1,000 to £2,000+ per sq ft, compared to around £300 to £450 per sq ft in central Birmingham.

The city’s affordability dovetails with improvements in amenity and lifestyle, making it a destination for young workers and families alike.

Economic outperformance Birmingham has benefitted from a fast-growing local economy as well as large-scale city centre regeneration which is helping fuel population growth.

Economic expansion is forecast to continue, and is set to outperform the wider West Midlands during the next decade, according to Experian. Birmingham’s gross value added (GVA), a measure of the value of goods and services produced in an area, is set to climb 25.5% by 2028, faster than all other local authorities in the region.

Meanwhile, in December 2017, the city was announced as the new host for the 2022 Commonwealth Games, a move that will potentially bring further economic benefits.

Demand The number of people living in Birmingham will rise by 171,000 to 1.3 million by 2039, according to the latest official population projections. This translates into nearly 100,000 additional households being created over the next two decades or so.

Pipeline and development

Housing delivery data suggests that there is an imbalance between the supply of new homes and demand for housing in Birmingham. Some 1,751 net additional dwellings were delivered in 2016-2017, down from 2,839 the previous year, according to data from MHCLG. Birmingham needs 3,577 additional dwellings every year until 2026 in order to meet demand and clear the backlog, according to official estimates.

Looking to the future, the most recent planning data suggests that around 9,700 private residential units are in the development pipeline – either under construction or with planning granted, according to data from construction intelligence provider Glenigan.