Should I invest in Birmingham buy-to-let property before or after HS2 completes?
April 24, 2023
HS2 will have a monumental effect on the Birmingham property market, undisputed; the high-speed trains will reduce journey times from one hour and 21 minutes to just 49 minutes, making commuting the 113 miles between the capital and Birmingham as efficient as the 40-mile radius of London's commuter belt. Astonishing!
But as a property investor, should you invest now or later, once the HS2 trains are running?
As ever, it depends on your investment goals, but there is some truth in the saying the early bird gets the worm because it's not just HS2 driving prices upward in Birmingham. It's the UK's second-largest city with all the economic clout that's come with such status. A booming economy, a center for culture, a major retail destination - Birmingham had everything going on before HS2 was announced.
All that to say, there are other factors at play apart from HS2, like the city's serious shortage of quality new build homes - no doubt affected by the pace of construction during the pandemic, but that could also pose a severe problem for property investors looking to access the Birmingham market in the future.
A report by JLL said that demand would outstrip supply in Birmingham by 2025 - less than two years away!
Prices are rising in the city, meaning the earlier you buy, the better rental return you can generate. Capitalize further on your ROI through the upswing in prices predicted – over 19% by 2027, according to JLL.
Once the trains are running, the increased connectivity that HS2 will bring will make Birmingham an even more attractive location for businesses and individuals, further increasing demand for housing in the city. Waiting for this, you risk buying at a higher premium – if you can find the right kind of stock to buy at all; a greater risk, we consider, than buying now ahead of HS2's completion.
But, as ever, location is vital. One of the key market drivers in Birmingham's top-performing rental properties is their location in the city's key places of work. Tenants who live in Birmingham's city center do so because they like to walk to work. Our Jewellery Quarter developments are ideal investments in this respect, only a short walk from Birmingham's CBD and other significant areas of employment, with prices starting from only £199,500. Tyndall Court, for example, is projecting a 10-year ROI of 150% modeled on a short-term let with an interest-only mortgage.
So, if you're wondering whether to invest in Birmingham now or once the HS2 trains are up and running, our advice is the earlier, the better. Contact us today to discuss this further – we'd happily answer any questions.
RICHARD BRADSTOCK
about the AUTHOR
RPA’s founder, Richard has worked in residential development investment for 20 years and oversees the general running of the business ensuring the RPA Group retains true to its founding principles. Over his career Richard has built an incredible network of international property investors and like-minded industry professionals. The RPA Group was born out of a duty of care to provide property investors with an industry-leading and integral service, one that connects investors with quality and desirable investment opportunities, whilst providing reliable and trustworthy market commentary and analysis alongside, enabling investors to make the best, most-educated decisions for them.