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According to the latest UK Economic Outlook by PwC, the West Midlands is expected to experience the second highest house price growth in the UK, only just behind Wales.
The region is predicted to see the highest house price inflation in the entirety of England in the next two years, with an average house price growth of 3.4 percent in 2019 and 4.2 percent in 2020. This is a steep difference when compared to the UK average of 1.2 percent and 2.1 percent for those respective years.
Another study by estate agency Hamptons International revealed that the West Midlands’ economic and employment areas have both positively impacted the property market in the region. The West Midlands boasted an incredible 6% increase in employment levels from 2015 to 2018, while the national average during that period was only 3.5%. A promising 14.8% growth in properties (excluding new builds) is expected across the West Midlands, which makes for a positive outlook on the next few years.
This means that the average house price in the West Midlands region is expected to rise from the £194,000 in 2018 to around £223,000 by 2022. At a time when the cost of private renting is becoming more and more of an issue for tenants, with those working in public sectors such as the NHS becoming increasingly unable to afford rent.
PwC’s report warns that this increase in house prices might then lead to a shortage of employees in these key public sectors, with not only NHS employees but also teachers and police offers being unable to afford rent with the increase in prices. This would be detrimental to both economic and social mobility.
To be considered affordable, renting living accommodation must cost less than 30 percent of gross annual income. However, PwC’s report finds that an employee would need an annual salary of £23,800 to afford the median private rent in the UK, which is £400 more than in 2017/2018. This then means that the UK’s median private rent has crossed the 30 percent affordability threshold.
Currently, workers in the West Midlands between 22 and 29 years of age spent approximately 27 per cent of their monthly earnings on rent, which is only just below the 30 percent affordability threshold. This varies by region, however, as rent prices in the South of England, and in London specifically, are way higher than this, which makes it incredibly difficult, if not almost impossibly, for key professions to live there.
Matthew Hammond, who is the Midlands region chairman for PwC, said that house price inflation in the 12 months leading up to April 2019 was strong in both the East and West Midlands at 2.9 and 2.2 percent respectively. He said that the Midlands was in the top five regions in the UK for underlying house price growth, and that growth rates are forecast to continue strongly throughout 2019 and 2020.
Growth rates are expected to continue at between 3.1 percent and 4.1 percent, with the medium-term average for 2021 and 2022 being around the 3.2 percent area. Hammond adds: ‘Whilst average house prices are higher across London, the South East and South West, by 2022, if the growth is as forecast, average house prices will break through the £200k threshold, reaching £223,000 in the West Midlands and £214,000 in the East Midlands by 2022.”
With house prices expected to grow in all regions and property in London becoming less affordable by the year, Birmingham and the West Midlands seem to have a bright future ahead. This is partly because of the growing young population in the region, who have been credited with the 5% increased demand in property in the region across the past three years. One of the youngest cities in Europe and boasting five universities, 40% of Birmingham residents are under the age of 25. The ever-growing young population of the city is expected to further increase demand in the city’s property market.
If you are looking to move within or re-locate to the West Midlands, we at Aston Knowles would be delighted to register your new home criteria and keep you up to date with our latest new instructions within Sutton Coldfield and its rural periphery. We can even get you signed up to our exclusive off-market list, which features premium properties that are not on portals such as Rightmove or Zoopla! Get in touch today via 0121 362 7878 or via enquiries@astonknowles.com.
Sources:
Greater Birmingham Chambers – Region to Experience ‘Highest House Price Growth’
Buy Association – West Midlands Has Seen a Rise in Employment Rates and House Prices
