HS2 will reduce the travel time to London from some key northern cities? We ask will HS2 drive up property prices in the north of England?
What is HS2?
HS2 is a high-speed rail link which will connect several northern cities to London. This train link will dramatically reduce the travel time between the three largest cities in the UK.
The journey times from London, once the line is complete will be:
- Manchester – 1 hr 7 mins
- Birmingham – 37 mins
This is significantly faster than the current journey times from London via train. It is anticipated that this increased connection to London will drive up the economy of these two northern powerhouses.
We have seen that many companies have already relocated away from London. This trend makes financial sense. With the emergence of technology and increasing numbers of people choosing to work from home, many employers are realising that there is no need to have all their employees working in the capital. London commands higher office rent and staff need to pay extra wages to compensate for the high living costs of the city.
With the increasing connectivity to London relocating many employees is a real possibility. Many younger employees prefer to live and work in Birmingham and Manchester due to improved affordability.
From a property perspective, home ownership is outside of the younger generations grasp in London due to sky high property prices in the capital. Northern cities offer hope. This is why Manchester and Birmingham are expected to have an increasing population,, as younger professionals choose to work there.
News update
Construction on the line is underway, and the overall project has achieved two major milestones last month.
1/ The Square One Building
The first is the purchase of a major site next to Piccadilly Station where HS2 trains will arrive. The Square One building, currently the home of Network Rail, has been acquired by HS2. The Department for Transport will play an instrumental role in the construction of the new line.
This acquisition follows the purchase of a large carpark adjacent to the development last year.
Ruth Todd, chief commercial officer at HS2, referred to the purchase of Square One as a “major milestone” for the high-speed rail project.
“HS2’s purchase of Square One is a vote of confidence for investors locally and internationally to leverage the wider regeneration potential of the surrounding area, knowing that Manchester is set to become so brilliantly connected,” she announced.
2/ Legal groundwork
Legal groundwork for the HS2 extension to Manchester in the Queen’s Speech via the High-Speed (Crewe-Manchester) Bill, is the second milestone announced last month.
This new stature will underpin future work on the line which will eventually become HS2 Manchester. Now that it is moving into law, the next phases of work can get underway and the benefits of the new line get closer to our city. This is important progress as HS2 has been contested by a section of the UK population, due to the anticipated £88 billion build cost.
Boost to the Economy
Once complete, HS2 will be a major boost to Manchester and official estimates show that as many as 96,000 jobs may be created in the long term, with the economy of Greater Manchester potentially doubling in size up to £132bn annually.
For Birmingham, the benefits are great still due to its closer proximity to London. The latest study was commissioned by HS2 Ltd, the company responsible for developing and promoting the project. It says Birmingham’s economy could be boosted between 2.1% and 4.2% a year, while Manchester would benefit between 0.8% and 1.7%
Ramifications for the property market
Birmingham has already seen a big boost to its property prices due to the anticipated effect of HS2 on the economy. The city boasts some of the best property demographics in the UK from an investment prospective. Rental yields are high, rise great prospects for capital growth.
For Manchester, Leeds and other northern cities HS2 has aided property prices but its biggest impact has been seen in Birmingham. This is because it is both closer to London and its connection will be completed first.
At M1 Estates we look at the key drivers which determine property profitability. We work with several developers in northern cities to secure the best deals for our clients.