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Birmingham’s Wide Property Investment Spectrum

Growing Disparity Between the Cheapest and Most Expensive Properties

Birmingham’s thriving economy and ongoing development plans make it a hotspot for property investment. But what sector brings the best returns?

Birmingham has been attracting residents and investors alike over recent years, and several factors, including its Big City Plan and its thriving industries, have kept the property market particularly buoyant, even in the difficult financial conditions of the past five years.

With a further 50,000 new properties planned over the coming years to accommodate continuing population growth, there is no doubt that Birmingham will continue to be one of the top property investment hotspots for years to come.

The average rental on a property in Birmingham currently stands at around £1,130 per month. Recent research has, however, shown an increasing disparity between the cheapest and most expensive properties in the market.

As property prices continue to soar, rentals are expected to outstrip sales next year for the first time since the 1930s. This represents a critically important time for property investors, who are left to ponder which end of the scale might offer the best returns.

The cheapest properties

Six miles to the north east of Birmingham City Centre lies the Castle Vale housing estate, a residential area with a population of around 10,000. The estate was built in the 1960s, consisting of high rise tower blocks, four-storey blocks of maisonettes and hundreds of detached and semi-detached houses.

It was typical of the post-war overspill areas of the time, and soon went into decline. During the 1970s and 80s, Castle Vale became synonymous with social crimes such as muggings, drug dealing and joyriding.

Major regeneration programmes over the past 20 years have seen most of the 1960s high rises demolished and new properties constructed. Other infrastructure improvements have included a new Enterprise Park and shopping centre, and social projects have resulted in a significant drop in the crime rate.

Despite these measures, Castle Vale has not been able to shake off the negative reputation of years gone by, and it is the cheapest area to rent in Birmingham. Average rentals are just £441 per month, almost £700 cheaper than Birmingham as a whole.

Other low cost areas include Handsworth to the north west, Winson Green to the west and Nechells in the centre of the city. In these areas, average rents are less than £600 per month.

The most expensive properties

Anybody familiar with the geography of Birmingham might be surprised to learn that while the traditionally affluent suburb of Harborne or the trendily regenerated Digbeth both command higher rents than the average, they are, by some margin, surpassed by the formerly industrial region known as Selly Oak.

Located to the south of the city, and close to the University of Birmingham, the average rental of more than £1,500 per month is somewhat skewed by the large volume of houses that have been transformed into student accommodation, accommodating up to ten per house.

However, there is no disputing the fact that the area commands rents at the upper end of the scale. For example, one five-bedroom house was recently put on the market with a monthly rent in excess of £2,000 per month.

The best returns

Most experts agree that the very best yields can be gained from mid-range properties aimed at young professionals and on average, flats tend to generate better returns than houses.

Having said that, increasing rents, a healthy local economy and a rising population mean that there are no bad investments in the Birmingham market, and investors are all but guaranteed a good return on any property.

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