House price growth in many ot the UK's key regional cities has out-performed London over the last year, according to land registry data analysed by Savills research team. 

In annual growth figures Manchester, Birmingham and Edinburgh in particular have shown an increase against annual growth in London. Edinburgh leads the pack, with an annual growth of 9.9 per cent against 1.7 per cent for London and 4.1 per cent for the country as a whole.   Birmingham comes in second with an annual growth of 9.7 per cent, followed by Manchester at 8.7 per cent.

Each of these key regional cities has their own distinct character and unique attractions and each is seeing growing demand from those who would like to live and work in thriving metropolitan areas.    

Manchester

Manchester’s ambition and strong economic outlook are some of the key drivers behind this area’s strength in house price forecasts and investment in HS2 will drive growth in the longer term. Manchester’s housing supply has accelerated dramatically, but it still doesn’t meet demand. The continued growth in the commercial sector and demand for quality office space demonstrates a strong employment market which is in turn driving residential demand in the city centre and beyond. The infrastructure and investment sector is also thriving, with Manchester only second to London in terms of Foreign Direct Investments made in 2017 with 47 projects.

With the highest graduate retention rate outside London and the growth of the high tech and media sectors within the city, we are seeing an increasingly highly educated workforce and a growth in the 18-35 year old demographic. This sector of the market is agile and attracted to the flexibility of renting, certainly in the initial stages of their career and this has significantly affected demand in within the city centre and creating a dream scenario for investors keen to deploy their capital outside of London who are enjoying strong rental yields and capital growth.

The shortage of available housing stock is a real issue within the city, with demand significantly outstripping supply, in particular in the new build sector which is struggling to supply the owner occupier market adequately, favouring the off plan sales model. While supply levels are now at their highest since the global finical crisis, the number of ‘for sale’ units remains relatively low, with a significant number of new build schemes due to enter the Built to Rent Sector rather than the open market.

The outlook for Manchester remains very strong, a genuine alternative to London for business and employees alike, with a thriving cultural and leisure scene, first class employment opportunities and a real sense that the city is undergoing an economic renaissance in all sectors.

Edinburgh

Natalie Simpson of Savills Edinburgh Residential Development Sales says: 'Edinburgh is an international capital city in the midst of rapid growth. Over the past five years the population has grown by 24,540, exceeding the half million mark for the first time, and it is anticipated that 3,000 new households will be created over the next five years. The city is currently expanding on a number of fronts: from the gentrification of the East End, which has been turbo-charged by the ambitious St James development, to rapid residential development that will reach well beyond the current city limits in almost every direction. The trick will be to ensure that future growth is not at the cost of the city’s first class reputation as an attractive and dynamic place to live and do business.'

• Read more Spotlight: Scotland’s Residential Property Market

Birmingham

Joe Shorney of Savills Birmingham Residential Development Sales says: ‘The fundamentals for the Midlands remain strong with Birmingham continuing to reposition itself nationally as a major regional centre with a dramatically enhanced profile. The increased connectivity promised through the delivery of Midlands Metro and HS2 is driving demand, bringing more people to Birmingham to live, work and play.

'Ahead of HS2 at Curzon Street station, there has been significant investment in the regeneration of Birmingham city centre. This has also triggered commercial investment from companies choosing to relocate to the Midland’s such as Deutsche Bank and HSBC, which has helped to drive residential demand, subsequently boosting house price growth.

'There is significant pent up demand in Birmingham. Since the downturn, the level of new homes development has been substantially reduced with a backlog of delivery. However, this is changing, with more supply now starting to come through. For instance, the regeneration centred around the 43-acre Port Loop site located west of the city centre is a major development planned for the city centre fringe – a huge masterplan sets out the vision for up to 1,150 new homes together with associated commercial, retail and leisure facilities in an area which neighbours Edgbaston Reservoir and the Jewellery Quarter.

'Birmingham is one of the youngest cities in Europe, with under-25 year olds accounting for 40 per cent of the population. Home to five universities, the city is also seeing a high retention of graduates with a knock-on effect on demand for new high-quality housing.   

'We are also seeing an extension of the traditional city core, with residential development opportunities spilling out into areas such as the Gun Quarter, Digbeth, and Ladywood, locations benefitting from increased levels of investment in placemaking and public realm improvements. Further up the ladder the city is acknowledging the need for family housing to stop the exodus into the suburbs. The willingness and ‘can do’ attitude of local authorities to engage is attractive to those looking to invest in the city, emphasised by increasingly acquisitive PLC Housebuilders.   

'The future is looking bright for Birmingham.'

• Read more Market in Minutes: New homes and infrastructure

FURTHER INFORMATION

Savills Manchester Residential Development Sales

Savills Birmingham Residential Development Sales

Savills Edinburgh Residential Development Sales