The high speed 2 rail project from London to Birmingham and then on to Leeds and Manchester offers first time buyers the ideal opportunity to buy a home now that could, if the project is ever finished, help them enjoy equity gains once services start.
When the project was given the green light in 2012, much was made of the boost it would give local housing markets not only in the key cities it would connect but also the hub and ‘feeder’ stations along its path.
These include Nottingham, Chesterfield, Sheffield, Wakefield, York and Derby. The route will pass from Crewe to Manchester, and West Midlands to Leeds also.
But seven years and £7.4 billion later and only the preparatory work has been completed and although Boris Johnson has called it in for review as costs have escalated, its effect on housing markets is already being felt.
Is the HS2 railway generating a property boom?
According to local estate agent and property developers, the Hs2 project has been credited with helping stoke a property boom in the Midlands over the past five years.
For example, Savills says that in both Birmingham and Coventry house prices within 2km of each city’s main railway station prices have risen by between 12 and 14% more than other areas further away over the past five years, helped by an influx of first time buyers.
Could this help first time buyers?
Growing interest in commuter towns
One reason for this is that more and more young Londoners are looking for commutable towns and cities in which they can get on to the property ladder, Savills says.
Government data shows that in both Birmingham and Coventry more people arrived from London to live than the number of locals who left to seek their fortunes in the capital, or nearly 4,000 people last year in total.
Younger first time buyers seem happy to put up with a long commute now in the expectation that the high speed rail network will enable them to be whisked into London quicker in the future, while their homes will enjoy increases in value as other young commuters ‘jump on board’ and stimulate demand.
Reducing journey times is given with this high speed railway line – making choosing between city living and home buying less difficult.
Rising house prices from high speed rail link
Birmingham is also now awash with new home developments that are being built in anticipation of HS2 arriving in 2026; the official completion date for the first leg.
HS2 route – Birmingham’s property market transformation
One of the key developers to arrive in the city, Galliard, recently said the project was set to “not only change the face of travel between London and the North but also radically transform Birmingham”.
“HS2 isn’t solely bringing great transport links to the area; it is also playing a vital role in Birmingham’s evolution, providing the city with vast opportunity for regeneration and development,” the company says.
The route will even go via Birmingham Airport.
But the government is more cautious about how much a high-speed line can create demand for property, claiming that it is a ‘contributing factor’ in some areas, but not a ‘significant’ one.
Nevertheless, similar claims for developments are being made in Manchester and Leeds.
New housing developments
For example, a large housing development given the green light recently in the Trafford area of Manchester made it through the planning process partly because its 2,400 homes will be near the proposed HS2 interchange railway station.
But, until the political problems with HS2 are sorted out, construction gets under way in earnest and people begin moving from London to Birmingham and beyond in significant enough number to move property market, it’s still a guessing game how housing market will respond.
Nevertheless, the price differences between London and many of the towns and cities that will become more commutable to it via HS2 are significant. For example, the average price for an apartment in Birmingham city centre is £203,000 according to Rightmove compared to £611,732 in London. Even in an affordable area of London like Streatham, for example, apartments sell for £396,393 on average.
This affordability gap, even if you leave out the effect of HS2, will see house prices in Birmingham rise by 20-30% over the next four years claims data firm Hometrack as many younger home buyers move out of London permanently to relocate to Leicester, Coventry, Birmingham and Nottingham.
And if HS2 does continue despite the government review, that is just seven years away.
Research is key for first-time buyers
For first time buyers hoping to track down the potential opportunities that HS2 may offer and buy a home within striking distance of a station, research is going to be everything.
Arm yourself with everything you need to know about a property and the area around it before you
make an offer. A property report pulls together all the information you’ll need, with everything from crime rates to local schools.
Plus, don’t forget to sign up (for FREE) to Move iQ to access practical guides to help first-time buyers get on the property ladder.