Birmingham Report An update on the new homes, rental and prime markets in Birmingham and its surrounding towns and villages - Berkeley Group
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An
Tiempos
update
Headline
on the new homes, rental and prime markets
in
Regular
Birmingham
Italic 13.5pt
and its surrounding towns and villages
Birmingham
Tiempos 54pt
knightfrank.com/research
Report
Tiempos Headline Semibold 13.5pt
Research 2020BIRMINGHAM REPORT 2020 BIRMINGHAM REPORT 2020
BIRMINGHAM
The housing market has slowed across much of the country over which is helping fuel population growth.
the last few years, with political uncertainty contributing to a Economic expansion is forecast to House price to income ratio
moderation in both price growth and activity. continue, and is set to outperform the Average house price / average regional income
wider West Midlands during the next
6.5 12.1 10.2 7.6
decade, according to Oxford Economics. Birmingham London Bristol England
To this end, Birmingham’s gross value
added (GVA), a measure of the value
B
of goods and services produced in an
irmingham hasn’t been immune Price growth has also been resilient.
area, is set to climb 16.4% by 2030,
to this slowdown, with a 3.9% drop Since the June 2016 referendum, average
faster than the average for the region.
in transactions over the 12 months to values are 16% higher, outperforming
Meanwhile, in December 2017, the
August 2019 compared with the previous the regional and national growth rates of
52%
city was announced as the new host
year, though the prime market above 12% and 9% respectively. Over the longer
for the 2022 Commonwealth Games, a
£500,000 has outperformed as we term, prices are 52% higher than the post-
move that will potentially bring further
explore later in the report. crisis trough in 2009.
economic benefits.
An overall fall in activity levels may Even with this level of growth, the average
Given the uplift in both job creation,
be in line with the national trend but price in Birmingham is around £187,000,
amenity, transport and population, the
Birmingham appears to be significantly notably lower than the UK average.
demand for both city-centre living, and
more robust than other parts of the UK.
This price differential underlines just Over the longer term, prices are for property in the towns and villages
In London or the South East for example,
one of the key drivers of the market in 52% higher than the post-crisis surrounding Birmingham, is expected to Source: ONS
falls of 8-9% in sales volumes have been
Birmingham and its surrounding towns trough in 2009. continue to grow.
seen over the same period.
and villages – its relative affordability
Birmingham house prices Transactions resilient
Average price, GBP compared to other areas of the UK,
Monthly sales volumes, Birmingham
especially those in the south of England.
200,000 2,000
The average income to average house
190,000
price ratio sits at 7.6 across England as
180,000 a whole. In Birmingham it is 6.5, notably 1,500
Number of sales
Average price, £
170,000 cheaper than nearby Bristol (10.2) or
160,000 London (12.1). This gives Birmingham
1,000
a significant advantage at attracting
150,000
and retaining a skilled workforce,
140,000 500
which in turn will help drive long-term
130,000 economic growth.
120,000 0
As the UK’s second-biggest business
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
hub, Birmingham has benefitted from
Source: ONS a fast-growing local economy as well Source: Land Registry
as large-scale city centre regeneration
2 3BIRMINGHAM REPORT 2020 BIRMINGHAM REPORT 2020
BUILDING MOMENTUM The majority of households living in the
city centre are in the private rented sector,
Midlands. Average asking rents across
the city have risen by 28% since the end
40% of final year students studying in
Birmingham said they intended to stay in
according to Knight Frank analysis. of 2009. For central Birmingham, this the city after they graduated.
level of rental growth is expected to
Around 60% of those living there are Data from the Centre for Cities also
continue in the coming years.
under the age of 35, reflecting the growth shows that Birmingham is the third best
in a young, professional population The rental market is supported by performing city in the UK for attracting
attracted by the improving jobs market demand from students studying at graduates who have no prior links to the
and career opportunities within the city. the city’s numerous universities. city, helping drive further demand for
Birmingham University was recently rental accommodation.
Some 10 build-to-rent schemes are
named as the 13th best in the country in
currently under construction – indicating The overall development picture in
Rising employment opportunities and a growing population The Times Good University Guide 2019.
the delivery of around 3,300 such units Birmingham has changed substantially
continue to underpin Birmingham's new homes and rental markets
in or around the city centre in the coming Birmingham is also well-placed to attract over the past five years. The new-build
years. In terms of rents, the growth in and retain graduate talent. According market is maturing, with schemes being
average asking rents in Birmingham to the results of the 2019 Knight Frank/ developed across the spectrum in price
has outpaced that in the wider West UCAS Student Accommodation Survey, and tenure. However, as such, there
B irmingham’s population has risen
by nearly 10% over the last decade,
this growth, with major housebuilders
including Berkeley Homes, Galliard
is more competition for buyers in the
market now, and past evidence suggests
with an additional 100,000 people living Homes and Urban Splash all launching Rental prices tick up that schemes which are the best located
Average asking rents, Birmingham
in the city. schemes in the city. In total, some 4,187 and built to the highest specification will
uu net additional dwellings were delivered 130 be at an advantage in this market.
It is set to continue climbing, with the
in 2018-2019, up from 3,160 the previous
latest forecasts from Oxford Economics 40% of final year students 120
year, according to data from MHCLG.
suggesting that more than 3,300 studying in Birmingham
additional households will be created intend to stay after The latest local plan for Birmingham 110
Help to Buy
every year until 2030. they graduate identifies a need for a further 2,500 homes
100
a year in order to meet demand and clear
The supply of new homes in uu
the backlog. 90
Birmingham, especially in the city Some 426 homes were purchased
centre, has picked up markedly in Looking to the future, the most recent 80 under the Help to Buy Equity Loan
recent years, partly in response to planning data from construction 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Scheme in Birmingham during the
intelligence provider Glenigan suggests year to June 2019, up 37% on the
Source: Rightmove
that around 14,000 residential units are same period a year earlier.
in the development pipeline – in projects
New supply rises There were 131 sales during the first
Net additional dwellings, Birmingham with 10 or more units – either under
quarter, beating the previous year’s
construction or with planning granted. A growing population
5,000 Estimated number of people living in Birmingham now and in the future quarterly average of 96. Over 2,000
However, it is important to note that homes have been purchased with the
4,000 not all schemes with planning will come to program since its inception in 2013,
fruition, and some larger schemes may take according to official figures.
3,000 many years to complete. Just over 6,500
The government in November
units are currently under construction.
announced it would restrict the
1.24m
2,000
Not all of these units will be entering scheme to first-time buyers and add a
1,000
the sales market however.
1.16m regional price cap of £255,600 in the
West Midlands.
2020 2030
0 Rental market Current population Forecast population Developers now looking at starting
schemes will be mindful that the
2005-06
2008-09
2004-05
2003-04
2002-03
2006-07
2007-08
2009-10
2001-02
2015-16
2018-19
2014-15
2013-14
2012-13
2016-17
2010-11
2017-18
2011-12
In addition to build-for-sale schemes,
scheme is set to continue past the
changing trends in housing tenure, and in
initial cut-off point of 2021, but in this
the city centre in particular, mean that the
Source: MHCLG Source: Oxford Economics more limited form.
rental market has also been expanding.
4 5BIRMINGHAM REPORT 2020 BIRMINGHAM REPORT 2020
PRIME MARKETS around Birmingham another factor
Age breakdown
Age breakdown of
of Londoners
Londoners moving
moving to
to Birmingham
Birmingham
underpinning these markets. 2018
2018
Supply has not kept pace with demand,
however, which in some cases has led 0-9
to premiums being achieved for the 10-19
best homes. 20-29
London movers 30-29
The prime market in Birmingham and its surrounding towns and
40-49
villages has proven resilient over the last year. Birmingham was the most popular city 1,564
50-59 2,732
destination for those migrating from 1,431
London in 2018, ahead of cities including 60+ 606
272
Manchester, Leeds and Bristol, according 205
to data from the ONS.
The age breakdown of those arriving
from London is also significant,
T he number of transactions in
Birmingham and its surrounding
Birmingham and came in spite of Brexit
uncertainty, as well as higher stamp duty
The city centre market has also been
active over the 12 month timeframe,
indicating that, while a large number of
those of student age are attracted to the Source: ONS
Source: ONS
markets with a value above £500,000 rates for the top end of the market which supported by the volume of high city due to its high quality universities,
reached a record high over the 12 were introduced in December 2014. quality new development taking place. a number of movers are also young
months to August 2019, analysis of Land workers and families.
Further analysis of sales data shows that Knight Frank data for the prime
Registry sales data shows.
market confirms this strong demand. The pace and the scale of economic Prime sales
Age breakdown of Londoners moving to Birmingham
activity was greatest just outside the
Dots
2018 can represent multiple sales in the same postcode
In total, 444 deals were completed city in surrounding towns and villages, The ratio of new prospective buyers growth across the West Midlands has
above this level, 17% higher than at to new property listings stood at been significant over the past few
including Sutton Coldfield, Solihull
the end of the same period a year 8.7 over the course of 2019, up from years. The level of new enterprises 0-9 960
and Edgbaston. The nature of housing
previously. Within this, there were 47 5.7 in 2018, underlining the current created demonstrates how the area is an 10-19 1,564
stock in such areas, which tends towards
sales with a value above £1 million, strength of demand. alternative to London as a business hub. 20-29 2,732
larger detached homes, acts as a draw
another record high. 30-29 1,431
for families and professionals looking to Schooling remains another
40-49 606
Such strong performance highlights move up the housing ladder in search of important factor for buyers, with
50-59 272
the resilience of the prime market in more space. the top quality schools in and
Most popular cities for 60+ 205
London leavers
Internal migration, 2018
Prime market outperforms 8,000
Rolling annual total, £500,000+ sales, Birmingham
7,000
£500k - £1m £1m plus 6,000
5,000
500
4,000 Source: ONS
400 3,000
2,000
300
1,000
200 0
Birmingham
Brighton and Hove
Bristol
Manchester
Leicester
Leeds
Coventry
Nottingham
Canterbury
Oxford
100
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: Land Registry Source: ONS Source: MHCLG
6 7OUTLOOK
The clarity afforded by a Conservative for the release of some of the pent-up The risk of a no-deal has not completely
majority in the General Election has demand that has been building, though disappeared, however, and December
removed some of the uncertainty that the extent to which this translates into 2020 marks the end of the transition
has been weighing on the UK residential transactions will depend on the size of period, potentially raising the spectre
property market over the last few years. the pricing expectation gap between of a no-deal in the second half of
In the short-term, this will pave the way buyers and sellers. 2020. Elsewhere, interest rates are
also likely to begin a gradual process
of normalisation in 2020, though we
West Midlands: Housing market forecasts expect rates to remain low compared to
Annual % change long-term norms. While development
levels are rising across the country the
shortage of new homes is unlikely to be
13% 10% fully reversed in the coming years and
2020-2024* 2020-2024*
SAL ES MARK ET RENTAL MA R K ET
this will underpin values, particularly in
3.0% 3.0% urban markets with rising populations
and strong employment prospects.
2.0% 2.0%
Against this backdrop, Knight Frank
1.0% 1.0% forecasts that residential property prices
in the West Midlands will rise by 13%
0.0% 0.0%
2020 2021 2022 2023 2024 2020 2021 2022 2023 2024
over the next five years. Rental growth
is also expected, with rents expected to
Source: Knight Frank Research *cumulative growth
rise by 10% over the same timeframe.
S O L D PRICE S RENTAL PR I C ES
3.0%
13% 3.0%
2020-2024*
SOLD
2.0% 2.0%
Oliver Knight Jamie Carter
We1.0%
like questions, if you've
10% 1.0%
Associate, Research Birmingham Sales, Prime Markets
got one about our research, 2020-2024*
+44 20 7861 5134 +44 121 233 6400
or 0.0%
would like some property
RENTAL
0.0%
oliver.knight@knightfrank.com jamie.carter@knightfrank.com
advice, we would love to hear
2020 2021 2022 2023 2024 2020 2021 2022 2023 2024
from you.
Peter Smith Sara Horton
Birmingham Residential Birmingham Lettings
Development, New Homes +44 121 233 6436
15% +44 121 233 6406 sara.horton@knightfrank.com
peter.smith@knightfrank.com
12%
9% 8,000
7,000
6%
Knight Frank Research provides strategic advice, consultancy services and forecasting to a wide range
Knight Frank Research
6,000
of clients worldwide including developers, investors, funding organisations, corporate institutions and
Reports are available
3% at the public sector. All our5,000
clients recognise the need for expert independent advice customised to their
specific needs. Important Notice: © Knight Frank LLP 2020 This report is published for general information
knightfrank.com/research 4,000
only and not to be relied upon in any way. Although high standards have been used in the preparation
0% of the information, analysis,
3,000views and projections presented in this report, no responsibility or liability
2020-2024*
whatsoever can be accepted by Knight Frank LLP for any loss or damage resultant from any use of, reliance
2020
2023
2024
2022
2021
on or reference to the contents
2,000 of this document. As a general report, this material does not necessarily
represent the view of Knight Frank LLP in relation to particular properties or projects. Reproduction of this
report in whole or in part1,000
is not allowed without prior written approval of Knight Frank LLP to the form and
content within which it appears. Knight Frank LLP is a limited liability partnership registered in England with
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registered number OC305934. Our registered office is 55 Baker Street, London, W1U 8AN, where you may
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