After a series of delays and budget changes, HS2 construction is now officially underway. The high-speed rail network will have a huge impact up and down the UK, so how could it affect property investment?
The UK’s heavily anticipated high-speed rail line is now under construction, the government has announced. Despite many counter-arguments surrounding the plans, Prime Minister Boris Johnson is pressing ahead with the scheme as a key part of his efforts to “fire up economic growth and help to rebalance opportunity”.
The first part of the project will connect London Euston to Birmingham, and beyond to Crewe. This section is due to complete between 2028 and 2031. After this, stage two will see high-speed lines added to Manchester, Leeds and other parts of the north and Midlands. At the moment, the end date for this is 2034-2040.
Boris Johnson says the project will create up to 22,000 jobs, which will be a huge boost to the UK’s economic growth. The main aim of the new line is to level up the country by increasing capacity and vastly reducing journey times between London and the rest of the UK.
Henri Murison, director of the Northern Powerhouse Partnership, says: “Increasing capacity on the north’s rail network and better connecting our towns and cities will be vital in the economic regeneration of the Northern Powerhouse – both now and long in the future.”
How HS2 could affect house prices
How the HS2 project will affect house prices will depend on the location of the property in relation to the new route. Ultimately, any major improvements to transport in an area are likely to boost its attractiveness. As a result, this normally pushes up house prices.
Many areas have already felt the effects just from the promise of the future railway line. In Birmingham, a number of major regeneration and property investment projects are currently underway. And many investors have cited HS2 as part of their reason for backing these projects. Those who invest now are expecting major house price appreciation over the coming years as HS2 opens up.
In an analysis by the Guardian, it takes examples of how past infrastructure projects have affected house prices. For example, when the M40 was extended from Oxford to Birmingham in 1991, house prices in nearby Warwick shot up. This is because the town was now within easy commuter distance of the city.
Crossrail in London is another good example. Despite delays, properties along the line have already doubled in value since 2008. This happened even through the financial crisis, when the new line got the go-ahead. Many experts expect this growth to continue as the line improves.
According to the Guardian report, properties within a 10 to 15-minute walk of stations along the Crossrail line could see house prices rise by between 30% and 60% over the construction period.
On the flip side when looking at HS2, properties very close to the line could see a different effect. According to Property Road, house prices within 500m of the line could decrease in the short-term. This is because of disruptive building works and increased traffic levels during construction. This is something to bear in mind when selecting a property close to HS2.
Where should you invest?
Birmingham is the first location set to benefit from the new HS2 line. Not only will the project itself create new jobs in the area, but a number of major firms have already begun to open offices in the city ahead of the transport improvements.
With the promise of better accessibility, house prices are expected to increase in the area as more people choose to live and work there. For property investors and homebuyers alike, the sooner you make an investment in the city, the more likely you are to see house price appreciation as the HS2 project progresses.
When the second phase comes in, cities such as Manchester, Leeds and Nottingham will come into its remit. This will further slash travel times to the capital. Similar to Birmingham, these cities have also seen more businesses open offices there. As the areas continue to attract a bigger talent pool and more residents, demand for housing will rise.
Even more peripheral towns should reap the benefits of HS2, as the plans also include improvements to existing lines. If you’re looking to buy away from a major city, in a place where house prices could see a boost, it’s worth keeping an eye on areas that are within easy travel distance of the new line.
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