This is not a blog about nice places in Birmingham or the surrounding areas. That would be good. But this blog is about a report from Knight Frank, an estate agent in London, about the house prices in Birmingham showing their resoluteness in not responding to the housing crisis since 2009.
In that I mean the average price of houses around Birmingham have not only kept their value but have increased by 45% since 2009, and not only that but have risen 5%-10%, year on year, since 2015. In theory if you had a house that was worth £178,000 and it rose by 5% a year for 5 years. You would have made over £50,000. Which is not bad.
The report shows why this has happened. You can read it all here. (you are now departing from the regulatory website, Coleshill Mortgage Services or Quilter Group are not responsible for the accuracy for the linked site). Its quoted to say the following:
“– its relative affordability compared to other markets in the UK, especially those in the South of England. As the UK’s second-biggest business hub, Birmingham draws comparison with London, the financial centre of Europe. However, when looking at residential property prices, the difference is striking, with newbuild development prices in some central zones of the capital ranging from £1,000 to £2,000+ per sq ft, compared to around £300 to £450 per sq ft in central Birmingham. The affordability trend dovetails with the improvement in amenity and lifestyle in the city, making it a destination for young workers and families alike.”
It’s funny, because it is pretty simple social economics, affordable housing, a place where you can get a decent job, things to do and make your life more richer (in more ways than one) means that the price of housing goes up.
So where does it end. Well we are not sure, do we end up with another London, where house prices get beyond the average earner. Possibly. The idea of a free market is that it will in theory sort itself out. Competition in a free market, means as house prices increase, sales go down and then therefore prices go down a little, everything becomes more affordable, inflation catches up, peoples pay catches up. House prices go up. So on and so forth.
It doesn’t always work like that. At the moment, in terms of buying a house to hopefully increase in price, will always be a risk. It may happen, it may not, so make sure you understand what you are doing, and the risks involved.
But at the moment the report forecasts a growth from now until 2020 in the Birmingham area, so it is always worth a look.
Your home may be repossessed if you do not keep up repayments on your mortgage.