HS2

HS2-Infrastructure And Benefits To Property Investors

HS2, being the second phase of the U.K.’s high-speed rail network, is a massive infrastructure project that has been an essential player in creating the “Northern Powerhouse” and promises to transform train connectivity between the north and south. As a result, it will connect the six big cities in the north: Liverpool, Manchester, Sheffield, Newcastle, Leeds, and Hull. It will also significantly reduce travel times to London.

What will this mean to the areas around the regions with these major transport improvements, and what will be the best investment?

Property Investment

According to Knight Frank, the ‘HS2 Effect’ has resulted in a 14% increase in house prices in just two years. In terms of property investment, those who invest now should expect significant price increases in the coming years when HS2 comes to fruition. Therefore, as a benefit, property investment will bring back good returns financially over the next few years for anyone planning to venture into real estate.

This comes as a result of an increase in population around the regions touched by HS2. A growing population will inevitably lead to an increased demand for housing, leading to a rise in rental yields and property value. “A simple question of supply and demand.” For example, in cities like Manchester, there is a high retention of students since 51% of students choose to stay around after graduation. Still, in Manchester, there has been a steady 9.3% annual growth between September 2021 and September 2022, which has been partially credited to the improvement of rail services, among other factors.

Another hotspot for property investment is a city like Birmingham. Rest assured that investors will benefit from significant capital appreciation in future because of the planned regeneration. Activities being hosted in cities like this, like the Commonwealth games, positively influence property prices with an appreciation of around 14.9%, leading to a steady 9.2% annual growth. This has led to it being ranked among the top 3 growing property markets in the U.K, among other cities.

Population growth is an important factor to consider if you are ultimately looking to invest in an area close to HS2. An increasing population correlates to a higher demand for housing. When the housing demand outweighs the supply of houses, prices will rise. In property hotspots such as Birmingham, Liverpool and Manchester, population growth is forecast to be on an up trend. This is common in more affordable areas or areas undergoing regeneration. As a result, investors should look to those areas for the best ROI.

A growing population indicates higher rental demand too. When the supply and demand imbalance is high, house prices will also be increased. Therefore, tenants will likely remain in the renting market for longer until they can afford to buy comfortably. Also, with a growing number of over 50 year olds entering the renting market, the prospects for investors have never been better.