Investing in Bristol Property?
South West England’s largest city, Bristol’s bubbling economy, quickly growing population and strong housing market have caught the eye in recent years, especially those from the London area. Investing in Bristol over the last few years has paid dividends for those with foresight.
Undoubtedly one of the UK’s most up and coming cities, the Bristol city-region has the highest productivity of anywhere in the UK outside of London and the highest household income. Dubbed ‘London-upon-Avon’ for its strong economy, wealth and draw for former Londoners seeking a quieter life, Bristol even has its own currency. The Bristol pound can be used in local businesses and even to pay council tax.
A combination of the quality of life and the availability of well-paid jobs Bristol and its surrounding area offers has unsurprisingly led to a robust housing market. Offering a balanced compromise to the security and wealth of London and the stronger rental returns and the remaining potential for price growth of the big northern cities, Bristol has become a property investment hotspot. The data below indicates why investing in Bristol is such a draw for investors.
One of the UK’s 10 ‘core cities’, Bristol has a population of 454,200, which is forecast to rise to half a million by 2027. Greater Bristol provides a home to a population of a little over 1.1 million. Between 2011 and 2015, Bristol was the city with the strongest population growth in the UK after London, up 4.5% against a UK-wide average of 2.9%. Over the past few years around 33% more 30 to 50-year-olds switched London for Bristol compared to the inverse migration route and 46% of the city’s working age population is comprised of graduates, 10% higher than the national average of 36%. Bristol has also seen one of the biggest relative boosts to its population from immigration in the country with foreigners swelling the population by 6% over the past decade.
34.5% of Bristol’s population is under the age of 24 and, at 39.5%, 25-49 year-olds account for by far the largest demographic group in the city. Bristol’s average age is 33.1, one of the youngest regions in the UK, which has a country-wide median average age of 39.9. 68% of Bristol’s population is of working age compared to the 63% national average and 37% of the population is 24-39 years old against a national average of 26%.
Home to 2 major universities, the prestigious Bristol University and the University of the West of England, as well as several higher education colleges, Bristol is home to over 35,000 students, accounting for 8.3% of the city’s total population.
The Bristol Economy
As already mentioned, Bristol’s economy is underpinned by the highest productivity per capita and household income of any region outside of London, making investing in Bristol a relatively low-risk activity. The UK Powerhouse report, produced by Irwin Mitchell and the Centre for Business and Economic Research puts the overall value of the Bristol economy at £13.6 billion with current pace of growth that outstrips that of London and Birmingham.
The finance sector is a major employer and Bristol, which has one of the highest concentrations of finance jobs in the UK. A much higher than average share of creative businesses and start-up companies is another noticeable feature of the economy. The local council’s decision to place Bristol’s ‘enterprise zone’ in the city centre rather than as an out-of-town business park, the most common model, has proven to be a masterstroke with the area attracting quickly growing companies who appreciate the vibrant city centre located next to the train station.
The recently published Tech Nation 2016 report places the Bristol/Bath area top of the nationwide league table for productivity of the Digital Technologies sector and new business starts in Bristol rose sharply between 2014 and 2015. In 2015 there were 4,237 new business start-ups and in the year to March 2017 Bank Search16 data indicates that there were 3,575 new business start-ups in Bristol, demonstrating the city’s position as an innovation hub. According to the 2015 Cities Outlook Report, more new businesses were established in Bristol between 2004 and 2013 than in any UK city outside of London.
Film and television production is also a strong local industry, contributing £18.3 million to the local economy over the past 16/17 year. Bristol Film Office issued permits for 484 productions, 31 per cent more than the previous year. The number of filming days recorded also increased, with a total of 1,050 taking place over the course of the year, up 11 per cent on 2015/16.
Bristol has, at 75.6%, the best employment rate of the UK’s ten core regional cities, comfortably ahead of the 73.9% UK average. Bristol’s unemployment benefits claimant rate is also, at 1.8%, the lowest of the 10 core cities and below the nation-wide 2% average. As of March 2017, Bristol’s unemployment rate was at a 12-year low of 4.7% to the UK’s 4.5% average.
Average weekly wages in Bristol are among the best of the UK’s core cities with workplace averages behind only Manchester and resident averages the highest outside of London at £454 a week. The gap between resident and workplace averages is also the narrowest indicating that most people working in Bristol also live there.
Public transport is one area that shows room for improvement in Bristol with complaints that those arriving into Bristol Parkway, the city’s second train station on the last train from London can face waits of up to 20 minutes for a bus. However, investing in Bristol and its infrastructure, such as the railway upgrade will also reduce the travel time between Bristol and London by 15-20 minutes within the next few years.
Major infrastructure projects currently taking place in Bristol include the new Metrobus network, currently under construction. A rapid public transport system, Metrobus is designed to quickly transport large numbers of people around the area by using a combination of segregated busways and bus lanes and connected to the traffic light system to ensure a fast, reliable, express service between 94 strategically placed stops. The new system is expected to speed up journey times, relieve congestion and reduce levels of pollution.
A new 12,000 capacity venue, the Bristol Arena, is also due to open in 2020. The modern amenity is located next to the Temple Meads station and is being built on the site of a former diesel depo.
Investing In Bristol Property – The Residential Market
Bristol is a property investment boom town with house prices at an average £311,000 compared to a national average of just over £301,000, according to Zoopla data from May 2017. A 2016 report in The Economist placed Bristol house prices as the most expensive in the UK for towns of a comparable size, at a multiple of around 10 to average annual earnings.
The extent of Bristol’s surrounding ‘green belt’, which covers an area six times larger than the city itself, makes increasing housing stock tricky and the supply of new homes grew even more slowly than inner London over the decade between 2004 and 2014. The Economist report also forecasts property would continue to rise due to an ongoing deficit in housing stock and improving transport links to London and other major cities.
Further Zoopla data demonstrates the house and rental price growth that makes Bristol a favoured destination for property investment, with the city outperforming UK averages over the past 5, 10 and 20 years. Over the past 5 years, house prices in Bristol have outgrown UK averages by 7.39%.
Bristol’s residential property market has maintained its status as ‘pricey but safe’ within the context of the last 6 months. While overall UK property prices in the UK slipped over the first half of the year, down 0.27%, Bristol house prices edged up 0.66%. That resilience was demonstrated in the aftermath of the 2007/08 international financial crisis when house prices in the South West dropped 1.62% less than the UK average. The recovery process was also faster and more pronounced than in other major UK cities outside of London with Bristol prices rebounding quickly. This reflecting the city’s economic strength, whose recovery outstripped that of Birmingham and Manchester by 2.9% and 4% respectively between 2009 and 2014.
LendInvest’s buy-to-let index puts the average rental yield on Bristol property at 4.6%, the best in South West England. While investment property in the bigger northern cities provide higher rental returns, investing in Bristol provides a very nice balance between reasonable returns and more resilient price levels that are still forecast to grow significantly. It’s this ‘best of both worlds’ status between London safety and northern returns that is the greatest strength of Bristol’s property market.
Savills’ 5 year 2016-2020 residential property prices forecast puts house price growth in the South West comfortably ahead of London, by 4.6% and UK averages, by 2.4%. The forecast predicted 19% house price growth for Bristol between 2016 and 2020.