A photo of the Birmingham skyline at night, showing beautiful modern properties

Birmingham economy set to soar as housing need ramps up

There’s a “unique opportunity” for property investors to help boost the housing provision that is currently lacking in Birmingham, as the city’s economic outlook goes from strength to strength.

A new report issued by Knight Frank has highlighted the fact that the supply of new homes in Birmingham is falling short of housing need in the city, as its population continues to grow due to a number of factors.

The city has a particularly high graduate retention rate, with around 41% of graduates choosing to remain in the city, while there has also been a surge in “high earners” migrating from London to Birmingham in recent years: according to Experian, the number of people moving in who earn more than £70,000 was up 26% last year.

Meanwhile, more pressure too is being added to the rental market, with the latest Census data from 2021 showing that 22.6% of households in Birmingham rent privately, compared with 17.9% in 2011. This heightened demand in both the homeowner and rental sectors make the city a key target for investment at the moment.

House price performance stronger than London

Knight Frank’s research reveals that, on average, house prices in the Midlands city have performed more strongly than those of the capital for the past five years, and particularly in the years since the pandemic hit in 2020.

The city saw a notable rise in housing demand in the post-Covid period due to the so-called “race for space”, as more people chose to leave London during this time and seek a better quality of life elsewhere. This has largely continued, exacerbated by the cost of living crisis which has made the capital less affordable for many.

However, while Birmingham’s house prices have continued to rise, the report points out that affordability pressures are being “less acutely felt” than elsewhere in the UK. For example, the median house price to workplace earnings ratio in London is 12.5, while in Birmingham it is just 6.3, according to the ONS.

The demand-supply imbalance

In 2022-2023, housing delivery in the Midlands city is expected to fall short by about 3,243 homes, with an annual housing need of an estimated 7,136. This indicates that prices are likely to remain buoyed by the level of demand exceeding supply.

Anna Ward, an associate in Knight Frank’s research team, says: “Despite there being a few months remaining of 2023, the fact that housing delivery is currently 60 per cent below the city’s annual housing target is a stark reminder of the supply, demand imbalance in Birmingham.

“It is reassuring to see plenty of ambitious schemes in the pipeline which will also bring forward new commercial development and jobs, but this only underscores the need to build more homes as the city’s economy and workforce expands.”

Birmingham economy will “grow significantly”

Over the next 10 years, Birmingham’s already strong economy is forecast to grow significantly, as more big businesses – including finance and tech firms – relocate from London, bringing with them more professionals on higher salaries and creating a new level and quality of housing need.

In 2023, the report points out that Birmingham’s Gross Value Added (GVA) was £27.8bn, and the current projection from Oxford Economics is that this will increase by 16% to £31.8bn by 2033 – compared with the 15% UK average. This huge growth will benefit today’s investors in the city, as employment prospects for those who live there also improve.

The report adds: “Residential investors and developers have a unique and significant opportunity to provide much-needed high-quality accommodation in a city with limited stock.”

As Will Jordan, a partner and head of Birmingham residential development at Knight Frank, points out, Birmingham is already leading the way as a major regional city, “attracting forward thinking developers and investors looking for opportunities within the build to rent and open sales markets”.

He adds: “With the increase in choosing to migrate to Birmingham from other parts of the UK, there is a huge opportunity to invest in the residential sector and meet soaring demand. There is so much untapped potential and it’s exciting to play a part in a city which is continuously evolving.”

BuyAssociation has a number of property investment projects available in Birmingham, as well as other top-performing locations across the UK. Browse some of our current investment opportunities, or get in touch for more information.

Self-certified Sophisticated Investor

Please read

I declare that I am a self-certified sophisticated investor for the purposes of the restriction on promotion of non-mainstream pooled investments. I understand that this means:

I am a self-certified sophisticated investor because at least one of the following applies:

I accept that the investments to which the promotions will relate may expose me to a significant risk of losing all of the money or other property invested. I am aware that it is open to me seek advice from someone who specialises in advising on non-mainstream pooled investments.

High Net Worth Investor

Please read

I make this statement so that I can receive promotional communications which are exempt from the restriction on promotion of non-mainstream pooled investments. The exemption relates to certified high net worth investors and I declare that I qualify as such because at least one of the following applies to me:

STAY AHEAD OF THE MARKET

Sign up for first access to new developments and exclusive property investment opportunities.

We send limited and targeted emails on new launches and exclusive deals which best fit your areas. We are trusted by over 30,000 active buyers as their source for new stock.

  • New property developments
  • Professional market reports
  • Property deal alerts
  • Development updates
Manchester property investment

FIRST FOR NEWS AND KNOWLEDGE.

Receive trending news straight to your inbox and stay up to date on all of the property market trends and advice.

Established since 2005 we are a leading voice of authority and commentary on the UK property market. Our news is trusted by Apple News & Google News.

  • UK housing market
  • Mortgage & money
  • Buy-to-let landlords
  • Guides & advice

Talk to us

Speak to our UK property experts today:

 

+44 (0) 333 123 0320

Open from 9am-6pm GMT

 

+852 6699 9008

Open from 9am-6pm HKT