The property market in Leicester has shown incredible resilience during 2017. According to the national House Price Index (HPI), the average price of a property in the region was £217,859, an increase of 7.1% for the year to date and well above the national average of 5.2%. The results are even more impressive because the market performed well above average during 2016 as well, partly due to Leicester City’s astonishing performance, winning the Premier League during the 2015/2016 season.
The resilience of the Leicester market is in stark contrast to the rest of the housing market in the UK, which is coming under considerable pressure following the uncertainty of Brexit negotiations, the weak performance of the pound, along with the general lacklustre economy as a whole. To illustrate this, house prices in the North East climbed by only 2.5% in the same period and house prices in London, perhaps the place most affected by Brexit, actually fell by -0.7%.
Leicester is the place to be
It is clear then that the West Midlands and Leicester in particular is the place to be for people looking to relocate in the region. Considering Leicester’s central location, within easy reach of Birmingham, Coventry, Peterborough and Nottingham, and its reputation as a key transport hub and engineering centre, it’s not hard to see why.
Add in the fact that Leicester is a city on the move in its own right, with the region home to a number of chemical and pharmaceutical facilities along with Europe’s largest satellite manufacturing facility, Airbus Defence and Space. The city is well placed to expand business and increase exports post Brexit. This will mean large numbers of highly paid scientists and engineers looking for housing stock in the city, putting pressure on already tight supply and increasing prices further.
In fact Leicester looks to be one of the areas that will benefit most in a post Brexit world. To highlight this point, the Office of National Statistics carried out a survey which studied the effect on Britain’s property prices in the 12-month period following the EU referendum. The data showed that housing costs climbed faster in the East Midlands than any other area in the UK following the referendum, with an increase of 7.5% during the period compared to 5.1% for the rest of the UK.
Brexit fails to halt East Midlands rental growth
It’s not just property price increases which are outstripping the rest of the UK. Rents in the region are also climbing above average due to a shortage of suitable housing stock. According to HomeLet, the UK’s largest tenant referencing agency, the average rental price for a property in the region climbed by 2.7% in 2017, well above the UK average of 1.4%. The average rent now costs £648 pcm.
The influx of younger buyers looking to rent, combined with a shortage of suitable housing stock in the region, shows that property investors and buy-to-let landlords should be able to maintain high capital growth and rental yields in the East Midlands for the next few years. Meanwhile, recent tax changes, the threat of rising interest rates and Brexit look set to hamper property investors in the rest of the UK.
Development plan is good news for investors
A chronic lack of suitable housing stock in the region is one of the reasons why the local property market has performed above expectations. While the government’s housing plan looks to solve this problem nationally, it still falls woefully short when affordable housing is considered. Affordable housing is one thing that Leicester is in desperate need of. While the Ashton Green development aims to add 20,000 new homes to the city over the next 20 years, it is woefully short of affordable housing options. Because of this, the demand for residential lettings is predicted to remain stubbornly high for the foreseeable future.
Despite this year’s impressive performance, property prices in the region remain accessible with the East Midlands and Leicester still offering exceptional value for homeowners and investors. If you would like to find out more about how Reliance Properties can help you find the perfect home or if you would like to sell your current home, get in touch with one of our local agents at Reliance Properties Leicester.