The East Midlands, which consists of several areas including Derbyshire, Leicestershire, Rutland, Northamptonshire, Nottinghamshire, and much of Lincolnshire, has an ancient history, rich culture, and breathtaking nature like the Peak District, Charnwood Forest with its volcanic rock and Sherwood Forest, not to mention relatively affordable average property prices and rents, making it rather easy to understand why the local population is growing, with more than 4.5 million people now residing here.
But while demand for property remains strong, a shortage of supply in both the East Midlands’ letting and sales segments continues to present a huge challenge for the local market, as it does across many parts of the country, as reflected by the latest 2017 RICS UK Residential Market Survey.
“The scale of the challenge the government faces as it announces its new approach to housing [white paper] is clearly demonstrated in the results from our latest survey,” said Simon Rubinsohn, RICS chief economist. .
The supply-demand imbalance has continued to drive house prices upwards across many parts of Britain over the past 12 months, led by gains in Rutland, according to the latest monthly data from Office for National Statistics.
Rutland, not just the smallest county in the East Midlands but also in England, has seen residential property values soar by 20.7% to stand at £307,000 on average, which is above the £234,000 average house prices in England.
Other local areas to have also seen property prices and rents rise in recent years are the region’s big cities Nottingham, Leicester and Derby, albeit at a slower rate compared with Rutland, supported by a strengthening local economy and the approval of HS2, the planned high-speed railway linking London, Birmingham, the East Midlands, Leeds, Sheffield and Manchester.
Another draw for the area, especially for young professionals and families, are the comparatively low living costs. These are even lower than in the West Midlands, where Birmingham dominates.
With more investment going into the area, the economy in the East Midlands has been transformed almost beyond recognition, and continues to outperform other regional rivals.
According to a recent Briefing Paper on regional and local economic growth statistics, the East Midlands was the fastest-growing economy outside of London and the south-east between 2010 and 2014 (the latest figures available), and the indications are that the region’s economy could strengthen further, especially as Nottingham, Derby and Leicester are now increasingly working together to attract investment.
An initiative called the Power of 3 (Po3) was set up by Invest in Nottingham, Marketing Derby and Leicester City Council last year and launched at MIPIM in Cannes to promote opportunities in the three cities, offering an idea of the insight that they had for the future.
Lorraine Baggs, inward investment manager at Invest in Nottingham, said: “Nowhere else in the UK has three cities so close together and such a large talent pool, which is really important to businesses.
“The three cities together are in an enviable position where they all fit in the ‘high quality, low cost’ bracket. That is very important for people looking to move to the region as an investment location.”
The East Midlands will once again have a presence at MIPIN this year, which takes place 14th-17th March, but this time as part of a larger Midlands-wide delegation – featuring ten Local Enterprise Partnership (LEP) areas.
The region will showcase more than £14bn worth of projects and investment sites to the annual exhibition’s 23,000 attendees – from potential investors and developers to property agents and the media.
“The Midlands is coming together on an unprecedented scale at MIPIM to attract even more investment from around the world,” said Sir John Peace, chairman of the Midlands Engine.
The region’s presence is being coordinated by inward investment agency Marketing Birmingham, together with the Department for International Trade (DIT) and partners including Birmingham Airport and East Midlands Airport, automotive giant Jaguar Land Rover and the Midlands Enterprise Universities group.
Cllr Jon Collins, leader of Nottingham City Council, said: “Considered to be the ‘heartbeat of the nation’s economy,’ the Midlands will propel Nottingham – and other regional cities – into the world’s attention.
“We are happy to play a pivotal role by being part of the wider Midlands presence, showcasing Nottingham’s development opportunities.
“Being part of the wider offer will help to promote the region and therefore bring benefits to the city.”
Residential property prices here have now been increasing continually for three years, with the latest government figures revealing that the average price of a home in Nottingham is now £125,519 and in the county it is £161,507.
Estate agents say some suburbs are now more expensive than ever – with prices now even higher than before the 2008 collapse.
“The current housing market in Nottingham is extremely competitive and we are finding that there isn’t enough housing stock to meet the current demands,” said Rob Pitick, director at Nottingham-based Fairview Estates. “Some bargains can still be found and in some cases builders and investors are buying property that is a bit run down, doing them up then flipping them.”
Rental properties in popular residential areas in Nottingham are in particular short supply, and reflecting on the current trend at the moment, Pitick (left) explained: “When a property comes to market it goes ever so quickly and even after the let agreed notice has gone up on our website, people still call in with a hope that the application may have fallen through.”
He continued: “Investment in the region is still driving the market forward; Nottingham is undergoing significant improvements all over the city and new housing projects are being built around the fringes of the centre which is encouraging more people into Nottingham.”
Property in places such as Edwalton and Beeston are proving particular popular, especially for young professionals with families, but it is the market in West Bridgford that is the stand out area at the moment, according to Pitick.
“West Bridgford continues to be as popular as ever with its trendy shops, bars and restaurants,” he said. “Ultimately, the absolute driving force for this area is its array of desirable schools.”
Pitick also highlights the southern part of the River Trent as being extremely desirable, especially areas such as Radcliffe on Trent, Cropwell Bishop, Plumptree and Bingham, “which offer lively market squares, good pubs and great Stilton cheese”.
He added: “Prices in West Bridgford generally start from £250,000 and go almost as high as you like. And the same really goes for the other areas south of the River Trent.
“Rentals for two bedroom family homes in Bridgford start at around £750.00 per calendar month and can go as high as £2,000 for the more unique, high-spec properties.”
In terms of affordable homes, Pitick says that Mapperley, Arnold, Sherwood and Carlton, all of which are within easy reach of Nottingham city centre, featuring a varied promenade of shops, bars and restaurants, and good schools, “are all gaining in popularity”.
“In Mapperley, Sherwood, Carlton and Arnold, rents start at around £650 per calendar month for a typical family home, and can rise to around £850.
“The most recent house price index release revealed a 5.5% year on year price change for Nottinghamshire.
“We’ve seen really encouraging sales in 2017 to date and there seems to be a large number of buyers out there looking for the perfect property. I strongly feel that this trend will continue as the year progresses.”
Residential property prices in Leicester are generally affordable at £156,400 – or seven times the average salary, according to a Home Truths 2016/17 report from the National Housing Federation.
Prices in Leicester compare favourably to Leicestershire on a whole, with the cost of a typical Leicestershire home now stood at almost £216,000.
The most expensive Leicestershire district is currently Harborough, while the least expensive area is Oadby and Wigston.
The local economy has remained far stronger than expected in the wake of the Brexit vote, and while there are uncertainties which could have an adverse impact on consumer confidence, underlying demand has remained strong in Leicestershire, and in particular in Leicester, while prices look set to rise in 2017, albeit at a slower rate of growth compared with last year.
“The housing market in Leicester has held up extremely well post Brexit with prices on average increased by 6% in 2016,” said Geoff Splevings, local director at Connells in Leicester.
It has been a steady start to 2017, with the number of applicants registering with the Connells Leicester branch proving almost identical to 2016, and the company enjoyed what Splevings described as “an amazing Q1 last year”.
Although Connells mainly operate in the middle market sector with the majority of their purchases coming from buyers looking to upsize and move up the property ladder, the company is now seeing investors coming back into the market following last year’s change in stamp duty.
Reflecting on the current state of the local market, Splevings (right) said: “The Evington and Scraptoft areas of the city are consistently our most popular locations having a diverse mix of cultures and easy access to the city centre. However, all areas of the city and county are proving popular at the right price.
“On average our vendors achieve 97.6% of their asking prices when using Connells Premium Marketing Pack which includes professional photographs, floor plans, audio tour and even an EPC if one is required.”
So far this year, there has been a significant number of new homes coming to the market place, including a site in Welford which is a highly regarded village location ideally situated to reach both Leicester city centre and Northampton within around 30 minutes.
The Miller’s Lock development from Mears New Homes features a wide selection of new homes, with prices ranging from £280,000 to £575,000.
Buy-to-let investors as ever are attracted to Leicester’s rental market which has been achieving some impressive yield returns in and around the city centre, with rents increasing on average by £100 a month over the past 12 months and taking on average two weeks to let, according to Splevings.
He continued: “Regarding rentals, demand for one bedroom apartments within the city centre is particular high at the moment and not just because of the students going to Leicester University. There has also been a high influx of professionals relocating to work within the insurance and banking sector with Hasting Direct among the large employers right in the city centre and Barclays based at the Meridian commercial park and Santander at Carlton Park, with both located south west of the city close to junction 21 of the M1.
“All in all Leicester is a thriving city which, in our opinion, will see growth in both house prices and the letting market in 2017.”
Derby is the UK’s most central city and is at the heart of the country’s transport network, with a ‘travel to work’ population of more than million people.
There is a positive property market in Derby, especially in and around the city centre, with an average overall price of about £170,000 in the city.
Demand for property in inner Derby is driven mainly by local employment, including young people just starting out in their careers, with global aerospace giant Rolls-Royce, which has just secured a £1.35bn deal to supply engines that will power a fleet of Boeing 787 Dreamliner aircrafts, by far the largest single employer in the city with almost 13,000 employees.
A number of large-scale developments are either currently being built or in the construction pipeline, designed to fully modernise the city and promote economic growth.
Further afield, demand is also high on the outskirts of Derbyshire, including places like Belper, Ashbourne and Matlock, where the market has just enjoyed its busiest ever festive period, according to Paul Westmoreland, Harrison Murray’s estate agency manager in the local region.
“During Christmas and into the new year it was very much business as usual, rather than the more traditional festive slump,” he said. “In the first two weeks of January we did a month’s work in 14 days and as a result had a very strong and encouraging instruction and sales month - something that is continuing.”
Westmoreland (below) continued: “We have already seen like-for-like business compared to January 2016 significantly up in January 2017 - with new buyer registrations up by some 300% and viewings by 400%.
“Matlock and the Peak Park area have always had a steady market attraction. Roughly speaking, 50% of our buyers move into the area for the scenery, lifestyle and an abundance of walks, pubs and recreational enticements.
“The area we serve is of historic value and protected for the most part and this attracts people who commute also as there are good access roads and rail networks to take advantage of.
“Ashbourne resonates with more of the retired community and local people, but also provides a great gateway into the Peak District National Park, so is also good for tourism.
“As the largest town of the three, Belper supports a local workforce, commuters and people working in nearby Derby city.”
One of the biggest challenges local estate agents, including Harrison Murray, currently face is a lack of housing stock to satisfy growing demand from buyers, according to Westmoreland.
“Last year we did see some drops in housing supply. This has seen pressure build on pricing for some types of property and we have used the ‘offers over’ approach where we know they will be highly sought after, and in most cases we have achieved higher than the expected market price.
“Pressure has so far this year increased and ultimately this will potentially lead to further increases in house prices.”
Given that the local tourism sector is vibrant and vital, there are a growing number of short and holiday rental properties popping up on the market.
Westmoreland concluded: “We are in a strong tourism area, so whilst we have a good long-term rental market equally as strong is the holiday let/tourism market and demand has led to people converting garages into holiday let cottages. There is currently also a move to supply B&B from spare rooms of normally occupied houses.
“One could be very optimistic here but putting a sensible head on I think we will see a steady increase in activity and confidence throughout the year, with potential house price increases if there are not enough houses to meet demand.”
Connells in Leicester
Invest in Nottingham
Nottingham City Council
*Marc Da Silva is Estate Agent Today and Letting Agent Today Features Editor. You can follow him on Twitter @propertyjourno