A new report looks at property market predictions based on current trends and expert forecasts. Birmingham is one city that’s leading the way for future growth.
Ups and downs in the UK housing market are nothing new. But even with the events of this year, the sector as a whole has remained remarkably resilient. Most industry experts predict that, over the long-term, this will continue to be the case.
In JLL’s most recent residential housing report, the firm looks more closely at which cities and areas could see the strongest property markets in the coming years. The forecasts take into account known factors and assumptions based on likely scenarios surrounding Covid, the global economy and Britain’s exit from the UK, among other points.
As a whole, the report tallies up with similar ones produced by the likes of Savills and other industry experts. Most predict a strong end to 2020 in terms of transactions and house price rises. However, things are likely to dip in 2021 when taking into account the knock-on effects of the pandemic on the economy. By 2022, though, the UK property sector’s upwards trajectory looks set to resume.
Strong growth in the Midlands
The picture across the UK varies from region to region, but the standout performer in JLL’s report is Birmingham. The Midlands city in the heart of the country is forecast to see house prices rise more than any other city in the next five years. The rental market will also perform strongly, says JLL, as demand in the area continues to grow.
By the end of this year, JLL predicts property prices in Birmingham will have risen by 4.5%. This compares to a national average forecast of 3.5%, while places like prime central London could fall by -2.5%.
Next year, as the whole country feels the knock-on effects from the events of 2020, house prices will remain flat in Birmingham according to the report. However, after this point, JLL expects the city’s property market to pick back up extremely quickly, with price rises of 4% in 2022, 5.5% in 2023, and 5% in both 2024 and 2025.
A major factor in these predictions is the current investment taking place and planned for Birmingham. HS2 will connect the city directly to London and Europe, making it a key business area in the UK. The 2022 Commonwealth Games will also bring huge levels of investment, regeneration and development to the area.
The report adds: “The city is also seeing a growing housing shortfall. However, Birmingham City Council is seeking to accelerate the regeneration of council-owned assets to deliver new mixed tenure housing solutions including private sale, build to rent, student accommodation and later living solutions.”
Property investors hone in on growing rental market
Birmingham and the surrounding area has been a popular place to invest in property for a number of years. The city is home to the biggest private rented sector (PRS) outside of London, and demand continues to grow. In 2019, PRS transactions totalled £326.7m, according to a report by CBRE. The firm also forecasts a further 10,000 rental households will come to the city over the next decade.
Its central position in the country and its excellent transport links make it a strategically ideal location. Birmingham also attracts hundreds of thousands of students each year, as well as graduates and young professionals, which are a big boost to the rental market. It is particularly popular among overseas investors looking to diversify away from London.
In terms of rental value forecasts, Birmingham is also a top location in JLL’s report. The firm predicts that while rents may only creep up by 1% by the end of 2020, and remain flat in 2021, the following years will see much more of a rise. The current outlook is a 3.5% increase in 2022, 3% in 2023 and 2024, and 2.5% in 2025.