HS2 and its impact on Northern UK house prices
HS2 is the new high-speed rail network coming to the UK which will massively enhance travel links across the country and reduce travel times. Starting in Birmingham with the first phase due for 2026 and coming to the North West of England due for 2032, the mere mention of HS2 has already driven up house prices to properties that will be near the stations. Here, I will discuss the effects of HS2 on property and how investors are taking advantage of potential capital growth well before completion.
Travel from major northern UK cities to London will be easier than ever with HS2 in place. Birmingham to London will be a 49-minute journey, and a train from Manchester to London via HS2 will be an hour faster than it is now; down 67 minutes from 127. This is a commuter’s dream, meaning that many will look to live in property which is walking distance from the HS2 terminal in city centres. The increased demand will lead to house price increases, and many investors are putting their money in off-plan property in cities like Birmingham, Manchester and Liverpool to capitalise on this in the future.
Over time there is also the distinct possibility that HS2 could invigorate the property market in the whole of the north of the country, thus addressing a problematic issue that has dogged Great Britain for too long: the north/south divide. The government predicts that 70% of the jobs created by HS2 will be outside of London, itself a catalyst for giving a boost to the property market in areas such as Birmingham and even other Midlands cities. Figures suggest that the East Midlands will gain most as a region in percentage terms – between 2.2% and 4.3% increase in output in 2037 projected, which may prompt a revival in the property market in many northern UK cities in the years to come.
A good example model for how enhanced transport links can increase house prices is the Crossrail in London and outer London areas. In London and the South East, the increase in value of residential property close to Crossrail stations, since that project was confirmed in 2007, ranges from 36-60%. Further increases are likely – values tend to get another boost once operations begin – but already smart money is turning to the High Speed Two rail link (HS2), especially now that the route from Birmingham to both Manchester and Leeds has been confirmed.
Many big businesses and companies are taking note of the HS2 effect its having on major northern cities. Birmingham has already seen a series of major corporates taking the opportunity to shift large parts of their business out of central London. HSBC and Deutsche Bank have done so recently leading to an increase of those needing property in the city centre. Perhaps most significantly, in March 2015 HSBC announced that it would move around 1,000 jobs from London to Birmingham, much of which is near the proposed HS2 station in Digbeth.
As a result, residential investors have already started ploughing into Digbeth, the area immediately near the anticipated HS2 station in Curzon Street. “There has been a wave of interest from developers in the area around the planned Curzon Street HS2 station,” says Mark Evans, head of regional residential development at Knight Frank. “The station is part of a much wider regeneration of this area and we can see this reflected in land prices.”
A similar story is to be found in Leeds and Manchester – something that both cities’ councils are keen to exploit. In Leeds, the council has designated the area around its main train station – which should start to receive HS2 services in 2033 – as an area to accommodate around 4,000 new homes. In Manchester, meanwhile, the council has designated six zones adjacent to its nascent HS2 station, three of which are expected to deliver significant volumes of residential property.
Due to the fact HS2 is some way off just yet, many big property agents are wary to forecast figures in terms of what the expected growth will be. But because of historical trends of transport link enhancements increasing property prices in the surrounding area i.e. Crossrail and DLR in London, all are confident that HS2 will follow in a similar vein and lead to capital growth for homeowners.