BIRMINGHAM RESIDENTIAL RESEARCH - MARKET UPDATE 2018 - Knight Frank
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RESIDENTIAL RESEARCH
BIRMINGHAM
MARKET UPDATE 2018
ECONOMIC PIPELINE AND
OUTPERFORMANCE FORECASTS
DEVELOPMENTOUTPERFOMING MARKET
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,
£25.3billion
Size of Birmingham’s economy in 2018
while recent regeneration is underpinning a bright
outlook for the one of the UK’s powerhouse cities.
(Experian)
Large-scale regeneration and Economic expansion is forecast to
development has contributed to continue, and is set to outperform the
outperformance in the city’s property wider West Midlands during the next
decade, according to Experian.
£
market, with the annual growth rate for
residential values averaging between 5% Birmingham’s gross value added (GVA),
and 10% since mid-2015, according to a measure of the value of goods and
12,108 data from the ONS. services produced in an area, is set to
climb 25.5% by 2028, faster than all other
The strong growth rate in prices seen in local authorities in the region.
New business set up in Birmingham in
2017, second only to London, according the past few years has contributed to a
to research by the Centre of Entrepreneurs 45% rise in average residential property Meanwhile, in December 2017, the city was
values since the post-crisis trough announced as the new host for the 2022
Commonwealth Games, a move that will
in 2009.
potentially bring further economic benefits.
Even with this level of growth, the average
price in Birmingham is around £178,000, Demand
notably lower than the UK average.
The number of people living in
1st
This price differential underlines just one Birmingham will rise by 171,000 to 1.3
of the key drivers of the Birmingham million by 2039, according to the latest
The most popular city destination for market – its relative affordability official population projections. This
those migrating from London in 2017 compared to other areas of the UK, translates into nearly 100,000 additional
especially those in the south of England. households being created over the next
As the UK’s second-biggest business two decades or so.
hub, Birmingham draws comparison with
London, the financial centre of Europe.
Pipeline and
However, when looking at residential development
property prices, the difference is striking,
1.3m
Housing delivery data suggests that
with new build development prices in
there is an imbalance between the supply
some central zones of the capital ranging
Forecast population of new homes and demand for housing
from £1,000 to £2,000+ per sq ft,
of Birmingham by 2039 in Birmingham.
compared to around £300 to £450 per
sq ft in central Birmingham. Some 1,751 net additional dwellings were
delivered in 2016-2017, down from 2,839
The city’s affordability dovetails with the previous year, according to data from
improvements in amenity and lifestyle, MHCLG. Birmingham needs 3,577
making it a destination for young workers additional dwellings every year until 2026
and families alike, as discussed on page 5. in order to meet demand and clear the
1,751
backlog, according to official estimates.
Net additional dwellings delivered
Economic Looking to the future, the most recent
planning data suggests that around 9,700
in 2016-2017, some way short of outperformance private residential units are in the
forecast housing need
Birmingham has benefitted from a development pipeline – either under
fast-growing local economy as well as construction or with planning granted,
large-scale city centre regeneration which according to data from construction
is helping fuel population growth. intelligence provider Glenigan.
2 Please refer to the important notice at the end of this reportRESIDENTIAL RESEARCH
Figure 1 Figure 5 Figure 6
Strong price growth has been seen since the financial crisis Growth in average asking rents Growing demand in the private
But prices in Birmingham remain notably lower than the UK average… rented sector
£250,000 Share of households renting
Flat - 1 bed Flat - 2 bed
900
£226,906
£200,000 2001
£177,828
£150,000
800
12%
£ per calendar month
£125,000 700
£100,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
United Kingdom Birmingham 600
Source: Knight Frank Research / ONS House Price Index
2016
Figure 2 Figure 3
500
23%
Q4 2014
Q1 2015
Q2 2015
Q3 2015
Q4 2015
Q1 2016
Q2 2016
Q3 2016
Q4 2016
Q1 2017
Q2 2017
Q3 2017
Q4 2017
Q1 2018
Q2 2018
Birmingham has benefited from a fast-growing Birmingham’s population is growing
local economy The number of people living in the city is forecast to reach
A trend which is set to continue… 1.3 million by 2039
Source: Rightmove Source: Knight Frank Research / ONS
1.35 1.3m
1.30
Figure 7
25.5% 23.0%
1.25 Birmingham residential transactions Rolling annual sales volume
1.1m 25,000
1.20
millions
1.15
20,000
1.10
FORECAST GVA FORECAST GVA 1.50
15,000
GROWTH IN GROWTH IN THE
BIRMINGHAM WEST MIDLANDS 1.0
(2018-2028) (2018-2028)
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039 10,000
Source: Knight Frank Research / Experian
GVA is a measure of the value of goods and services produced in an area Source: Knight Frank Research / ONS
5,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
1,751 3,577
Figure 4
Source: Knight Frank Research / ONS
Figure 8
2018-2022 Housing market forecasts
2018 2019 2020 2021 2022 2018-2022
West Midlands 2.0% 2.0% 3.0% 3.0% 4.0% 14.8%
Net additional dwellings delivered in 2016-2017 Housing need per annum, Birmingham UK 1.0% 2.0% 3.0% 3.5% 4.0% 14.2%
(MHCLG) (MHCLG consultation) on calculating housing need
Source: Knight Frank Research
3 4RESIDENTIAL RESEARCH
This includes projects comprising just over Birmingham is also well-placed to attract However, overall activity in the residential
5,300 units that are currently active on site. and retain graduate talent. According to an market in Birmingham remains well above
However, it is important to note that not all analysis of HESA data by the Centre for the levels seen in the four years after the
schemes with planning will come to fruition, Cities, 49% of new UK domiciled financial crisis.
and some larger schemes may take many graduates who were in employment six
years to complete. months after graduation stayed in the city Outlook
to work in 2014 and 2015. Birmingham is Given the uplift in job creation and amenity
also the third best performing city in the UK in the city centre, the demand to live in
Rental market for attracting graduates who have no prior Birmingham is expected to continue to
Asking rents for a 2-bed flat across the city links to the city, helping drive further grow. The improvement of transport
averaged £860 per calendar month demand for rental accommodation. infrastructure, both within the city and
in Q1 2018, up from £750 during Q1 2015, between Birmingham and other key UK
according data from Rightmove. cities, is likely to further augment this trend.
Sales market HS2, Europe’s largest infrastructure project,
The rental market is supported by demand The number of home sales taking place will potentially cut travel times between
from students studying at the city’s in the city has dipped over the last year Birmingham and London to under one hour,
numerous universities. Birmingham (figure 7), reflecting a wider trend as ‘churn’ increasing accessibility to jobs. In addition,
University was recently named as the 15th in the second-hand housing market has this plays a part in the city’s attraction for
best in the country in The Times Good fallen, with less movement up and down business and manufacturing, potentially
University Guide 2018. the housing ladder. helping to underpin further economic growth.
London calling
Birmingham was the most popular city Billions of pounds is also being spent on The city has also been named as a
destination for those migrating from infrastructure investment, with new tram host city partner of the 2022
London in 2017, ahead of cities lines, office blocks and public squares Commonwealth Games, news which
including Manchester, Leeds and planned as the city centre is remodelled. is likely to bring further economic and
Bristol, according to data from the ONS. Two High Speed 2 (HS2) railway stations cultural benefits.
are being built in central Birmingham and
The age breakdown of those arriving
nearby Solihull, which will shorten Figure 9
from London is also significant, Birmingham is the most popular
journey times to and from the capital.
indicating that, while a large number city destination for Londoners
of those of student age are attracted Figure 8 Moves from London, 2017
to the city due to its high quality Age of those moving to Birmingham
8,000
universities, a number of movers are from London
also young workers and families. UK migration data, 2017 7,000
The pace and the scale of economic 14% 6,000
growth across the West Midlands has 16%
r 14
de 5,000
been significant over the past few years. un 7%
91
-1 25-2
The level of new enterprises created 15 91 4,000
3%
demonstrates how the area is an 35-49 15% 30
3,000
alternative to London as a business hub.
-3
41
1%
2,000
In Birmingham alone, HSBC is
21% 7%
currently establishing a retail banking
2%
1,000
60
+
24%
headquarters while Deutsche Bank
3%
already has a trading floor and back 5 0-6 0 0
-24
Birmingham
Brighton and Hove
Thurrock
Bristol
Dartford
Epping Forest
Medway
Manchester
Elmbridge
Leicester
Canterbury
Leeds
Reigate and Banstead
Nottingham
Coventry
Hertsmere
Welwyn Hatfield
Slough
Oxford
Basildon
20
office jobs in the city. HMRC has
announced plans to move a large
number of staff to the city centre from
2020, while the city is also on the
0%
shortlist as the new home for Channel
4, alongside nearby Coventry. Source: Knight Frank Research / ONS Source: Knight Frank Research / ONS
5“AN UPLIFT IN JOB
CREATION AND AMENITY
SHOULD UNDERPIN
DEMAND FOR HOMES
IN BIRMINGHAM.
IMPROVEMENTS
TO TRANSPORT
INFRASTRUCTURE ARE
LIKELY TO FURTHER
AUGMENT THIS TREND.”
Oliver Knight, Residential Research
oliver.knight@knightfrank.com
With thanks to Birmingham City
Council for the front cover image.
Get in touch
If you’re thinking of buying in Birmingham, Mark Evans Knight Frank Research provides
or would just like some property advice, +44 121 233 6410 strategic advice, consultancy services
please do get in touch, we’d love to help. mark.evans@knightfrank.com and forecasting to a wide range of
clients worldwide including developers,
Peter Smith Kate Horton investors, funding organisations,
+44 121 233 6406 +44 121 234 0339 corporate institutions and the public
peter.smith@knightfrank.com kate.horton@knightfrank.com sector. All our clients recognise the
need for expert independent advice
customised to their specific needs.
RECENT MARKET-LEADING RESEARCH PUBLICATIONS
RESIDENTIAL RESEARCH
RESIDENTIAL RESEARCH RESIDENTIAL RESEARCH
UK RESIDENTIAL
MARKET FORECAST
The global perspective on prime property and investment FOCUS ON: FOCUS ON:
Headlines May 2018
UK house price growth has slowed
UK HOUSE PRICE FORECAST
COVENTRY
from a peak reached three years ago, There are five main factors at play in the sales seeing stronger growth and activity levels than
although the annual rate of change market at present. the traditional property powerhouses of
STAINES-UPON-
PARSONS GREEN
remains in positive territory First, the balance between buyer demand London and the South East, though large
and the supply of homes being put up for discrepancies in capital values remain.
sale, which differs across the country. The market’s political and economic mood
2018
Important Notice
Price growth across the UK is expected
music is a duet of Brexit and future interest
THAMES
to be 1% in 2018, and 14.2% Certainly, the disconnect in some UK towns and
rate rises.
2016 cumulatively between 2018 and 2022 cities between rising demand – on the back of
stronger economic growth – and muted stock Brexit will continue to create uncertainty in the
levels, is contributing to price growth. short-term. And while interest rate rises will
In London, price growth over the next push up mortgage rates, the rates payable on
Secondly, stamp duty remains a curb on
2018 five years is expected to be around
13%, although prices are forecast to
transactions. However, in prime central home loans will remain near historic lows in
the short to medium-term.
London, some parts of the market are moving
dip this year
into positive price growth for the first time in Finally, and perhaps one of the biggest factors
nearly two years. The trend is becoming in the market at present are the growing
UK rental growth is expected to be particularly apparent in areas where lower affordability pressures in some parts of the
© Knight Frank LLP 2018 – This report is
14% between 2018 and 2022 prices more fully reflect higher stamp duty country – these will weigh on pricing.
THE WEALTH REPORT 2018
charges. In the lettings market, rental growth has been
On a more regional basis, the North/South slowing for a year. However, as with the sales
divide in price growth has narrowed, with market, rental performance is dependent on
the Midlands, East of England and North West the type of property, as well as its location.
2018-2022 Forecasts, May 2018
published for general information only and not
2018 2019 2020 2021 2022 2018 - 2022
Mainstream residential sales markets
UK 1.0% 2.0% 3.0% 3.5% 4.0% 14.2%
London -0.5% 2.5% 3.0% 3.5% 4.0% 13.1%
North East 2.0% 2.0% 4.0% 3.0% 3.0% 14.8%
North West 1.0% 2.0% 4.0% 4.0% 4.5% 16.4%
Yorks & Humber 1.0% 2.0% 3.0% 3.0% 3.0% 12.6%
East Midlands 2.0% 2.5% 2.5% 3.0% 3.5% 14.2%
to be relied upon in any way. Although high
West Midlands 2.0% 2.0% 3.0% 3.0% 4.0% 14.8%
Methodology Statement: East 2.0% 3.0% 3.0% 4.0% 3.0% 15.9%
House price forecasts are based upon time series South East 0.0% 2.0% 3.0% 4.0% 4.5% 14.2%
regression analysis of relevant statistically significant
macro-economic variables adjusted in-house to South West 1.0% 2.0% 2.5% 3.5% 4.5% 14.2%
encompass externalities such as likely risk factors.
Wales 1.5% 1.5% 2.5% 3.0% 4.0% 13.1%
EALTH ADVISORY
The forecast uses the Nationwide House Price Index
as a base. Our forecasts assume a Brexit deal, but Scotland 1.0% 1.0% 2.5% 3.5% 3.5% 12.0%
with a two year transitional period. Rental forecasts
based on ONS IHPRP.
Prime residential sales markets
standards have been used in the preparation of
me property markets Prime central London East 0.5% 1.5% 2.5% 3.0% 5.0% 13.1%
Prime central London West 0.5% 1.5% 3.5% 3.0% 3.5% 12.6%
Prime outer London 0.0% 1.0% 3.0% 3.5% 4.5% 12.5%
rages market-leading research Prime England & Wales 1.5% 2.0% 2.0% 2.0% 2.0% 9.9%
“The political and economic
rvice to our global private clients
mood music of the residential Residential rental markets
market is a duet of Brexit and UK 2.5% 2.5% 2.5% 3.0% 3.0% 14.0%
future montary tightening”. London 1.5% 2.0% 2.5% 3.0% 3.5% 13.0%
rty, perfectly.
the information, analysis, views and projections
Prime central London* 0.5% 1.5% 2.5% 3.0% 3.0% 11.0%
Prime outer London* -1.0% 1.0% 2.0% 2.5% 3.0% 8.0%
2018 For the latest news, views and analysis
on the world of prime property, visit Source: Knight Frank Research
12th Edition our blog or @kfintelligence
NB. Price forecasts are for existing homes. Property values in the new-build market may perform differently.
*Based on Knight Frank indices and boundaries, existing homes only.
AFFORDABILITY DEVELOPMENT PIPELINE INFRASTRUCTURE UPGRADES AFFORDABILITY SUPPLY VS DEMAND COMMUTER LOCATION COMPARISON
presented in this report, no responsibility or
The Wealth Report - Focus on: Focus on: Staines- UK Housing Market
2018 Coventry 2018 upon-Thames - 2018 Forecast - May 2018 liability whatsoever can be accepted by Knight
Frank LLP for any loss or damage resultant
RESIDENTIAL
RESEARCH
RESIDENTIAL RESEARCH
RESIDENTIAL RESEARCH
UK RESIDENTIAL
MARKET UPDATE
from any use of, reliance on or reference to the
LONDON MULTIHOUSING
PRS RESEARCH
2017 STEADY SUMMER MARKETS contents of this document. As a general report,
CLASSIC CAR DEVELOPMENT
Pricing and transactions remain broadly steady overall, although large
regional variations are still evident. In prime London, the number of
this material does not necessarily represent the
new buyers registering interest in purchasing a new home continues
to climb, although there is caution among both buyers and vendors in
SPECIAL HOTSPOTS
some localities.
Key facts June 2018 Housing market and Overall transaction levels dipped slightly at
the beginning of the year, but as with pricing
economic overview
UK average house prices rose by the regional picture is mixed. In 2017, the
Luxury Investment Index Q1 2018
RESIDENTIAL DEVELOPMENT The average price of a UK home has risen number of home sales in the North West,
view of Knight Frank LLP in relation to particular
0.5% in June, but annual growth
slowed to a five year low at 2% to £215,444 – a new high, according to the North East, West Midlands and Yorkshire
OPPORTUNITY AREAS 2018 most recent data from Nationwide. and the Humber was higher than in 2016,
whereas in all other regions, the number of
Prime central London prices slipped transactions decreased.
by 0.2% in May, taking the annual Average house prices, UK
change to -1.4% Supply of stock coming onto the market
£250,000 remains near record lows – but is edging up
in some areas, according to the latest market
UK average rents were unchanged in
properties or projects. Reproduction of this
£200,000 sentiment survey from RICS. However, the
May, with an annual growth rate of 1% scale of the rise is unlikely to ease current
£150,000 supply constraints, which is putting a floor
under pricing in many areas.
Prime central London rents rose by
£100,000
1.2% in the three months to May
taking the annual change to -0.1% Number of home sales, UK
£50,000 Quarterly data
0 450,000
report in whole or in part is not allowed without
HMRC Land Registry
Jan 00
Jan 01
Jan 02
Jan 03
Jan 04
Jan 05
Jan 06
Jan 07
Jan 08
Jan 09
Jan 10
Jan 11
Jan 12
Jan 13
Jan 14
Jan 15
Jan 16
Jan 17
Jan 18
400,000
Source: Nationwide 350,000
300,000
The annual rate of price growth has
slowed to a five-year low of 2%, although 250,000
annual rates of growth have remained 200,000
between 2% and 3% over the last 12
150,000
months. As ever, there are regional
prior written approval of Knight Frank LLP to
variations, with 4.4% annual growth in the 100,000
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
East Midlands, compared to a 1.9% fall in
average prices in London. Source: Macrobond, HMRC, Land Registry
Regional range of house price growth, UK
Annual % change
GRÁINNE GILMORE
Head of UK Residential Research 40%
Highest level of London
the form and content within which it appears.
annual price growth
“The UK’s economic 30%
prognosis has improved 20%
in recent months, 10%
despite elements of 0%
political uncertainty.” Lowest level of
-10%
Follow Gráinne at @ggilmorekf annual price growth
Knight Frank LLP is a limited liability partnership
-20%
For the latest news, views and analysis
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ART MOVES INTO FERRARI 250 GTO SETS LAND ROVER’S 70TH on the world of prime property, visit our
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AREAS TO WATCH PRICE FORECASTS MARKET UPDATE
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Investment Index - Q1 Hotspots - 2018 - 2017 Update - June 2018 OC305934. Our registered office is 55 Baker
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