Why Invest in Birmingham Buy-to-Let Property in 2024?

Demand is vital for building a successful property portfolio and this is why Birmingham investment properties are such a popular asset with investors. With a population of 1.1 million according to the latest census, Birmingham continues to be a key location for young professionals, graduates and key workers that are seeking exceptional employment opportunities.

Birmingham’s population is also one of the youngest in Europe, with 40% under the age of 25 and many working in high-paid roles. This represents a large percentage of the local rental market and demonstrates why the yield performance of Birmingham buy-to-let property is so high.

It’s expected that demand for Birmingham will continue to grow as people continue to leave the capital. With a much more affordable property market and HS2 on the horizon, London leavers are seeing Birmingham as a great alternative to the capital for living while still being able to work within London. It’s no wonder thousands of Londoners make the move to Birmingham each year, with 242,764 Brits moving from elsewhere in the UK to the second city, demonstrating the sustainable demand a Birmingham investment could offer.

With Birmingham being one of the most affordable property markets in the country – at least relative to its population and size – it’s delivering above-average yields for investors. According to Rightmove, the average property price in Birmingham is £269,346, just over a third of the average property value in London at £769,222.

When we also consider that Birmingham annual rent growth hit 17.9% over the last year,  and rental prices are still forecast to rise by 19.3% between 2023 and 2027, it’s easy to see why the average rental yield for a Birmingham buy-to-let property is averaging around 5.17%.

This represents a much higher yield than we’re seeing in the South, which is averaging around 2% overall. Unsurprisingly, city-centre postcodes in Birmingham are performing the highest, with areas such as Digbeth, Edgbaston and the Jewellery Quarter leading the way. For investors that are searching for consistently high-yielding property, it becomes more clear why you’d invest in Birmingham in 2024.

Capital growth is always a major objective for property investors and buying a Birmingham buy-to-let property in the city-centre has plenty of potential. Impressively, despite seeing growth of over 70% over the last ten years, Birmingham remains one of the most affordable cities for buy-to-let investment in the country, providing the perfect balance between excellent growth and reasonable property prices.

Thanks to a large-scale program of regeneration, as well as continued demand from movers and workers, further price increases are expected. JLL predicts that Birmingham property will rise in value by a further 19.2% between 2023-2027 – excellent news for those asking ‘why invest in Birmingham buy-to-let property in 2024’.

An often overlooked demographic within the rental market is graduates. While students are often targeted by investors with HMO properties, graduates remain one of the top indicators of success for a single-let property strategy.

This is because graduates are part of the wider ‘young professional’ market that is incredibly attracted to city-centre properties near both the workplace and local amenities. Savvy investors will also understand that graduates are the ‘young professionals’ of tomorrow and will typically opt for much longer tenancies while having a much more secure income stream than students.

This is why we consider cities with good graduate retention as key locations. With over 100,000 students attending one of the five universities in the city, Birmingham’s retention rate of 41% highlights a vast amount of potential demand for buy-to-let property in Birmingham. The second city is also third best in the UK for attracting graduates with no prior links to the city, demonstrating the appeal it holds with the demographic.

You can’t answer the question ‘why invest in Birmingham buy-to-let property in 2024’ without considering the global businesses that dominate the professional space. As Birmingham has built itself into the Midlands powerhouse it is today, it has attracted the likes of HSBC, Deutsche Bank, PwC, the BBC and Goldman Sachs, all of whom now have headquarters in the city.

As household names, these businesses bring waves of new demand from professionals who are also seeking high-quality residential accommodation alongside career opportunities. Birmingham has a ‘professional sector’ of over 100,000 people, the largest in the UK outside of the capital, highlighting the potential tenant base that is already present in the city.

In terms of new business, Birmingham also had the largest proportion of new business starts in the UK for five years running – a number that is sure to increase alongside the opening of HS2 as Birmingham’s connectivity and catchment grows even further.