House prices in Bristol are set to increase by 1.5% this year compared to 0.5% in London and 0% in the South East, as the Bristol property market continues to rise according to a new report by global property experts JLL.
The report Find the Gap shows that the average price of a two-bedroom apartment in Bristol increased by 1.8% to £290,000 in 2018. JLL predicts that, with certainty expected to return to the market on the back of a Brexit deal, house price growth in Bristol will outstrip the performance of the past 12 months and they forecast an increase of 2.8% pa compared with UK wide growth of 2.2%.
The rental market in Bristol is also predicted to rise. Under supply of rental properties is leading to strong rental growth with the average rent in Bristol increasing by 4.1% last year. JLL expects rental prices to increase by average of 3.1% per year over the next five years compared with an average of 2.4% across the UK. Despite the fact that Bristol’s rental pipeline is now the seventh strongest in the UK with 2,100 units planned across ten new schemes, JLL expects demand to continue to outstrip supply in the coming years.
Bristol’s rental market is booming with 22% of homes privately rented compared to the national average of 16%. Around one third of the rental population is students, a sector which will continue to rise over the next five years according to JLL.
The strong property market is driving fierce competition from developers for city centre sites. Bids for recent opportunities have come from investors and developers from across the UK proposing schemes with competing uses including student accommodation, build to rent, hotels, offices and private sale housing. Despite several new proposed developments, including Bristol’s tallest residential tower, demand remains high for city centre homes, especially for one and two bedroom apartments, and it is not expected that the current delivery pipeline will satisfy this demand.
James Petherick, residential development director in JLL’s Bristol office said: “Bristol continues to pick up accolades for desirable city centre living – most recently it was voted best place to live in for under 26 year olds by the BBC – so it is no surprise that demand for housing continues to rise.
“Despite several new city centre schemes on the horizon, such as City & Country’s Factory No. 1 in Bedminster and ND7 – L&G’s build to rent scheme at Temple Quay, we see demand continuing to outstrip supply over the next five years leading to significant increases in rental values and house prices.
“New schemes such as the creation of build-to-rent developments will help to plug the gap, but Bristol’s planners and developers need to think creatively and flexibly if we are to build sufficient homes to meet demand.”
The report reflects the continued expansion of Bristol’s economy generally, as economic growth (GVA) is forecast to increase by 2.5% per year and employment growth stays consistent at 1% between 2018 and 2022. Generally, the south west is performing well in comparison with the rest of the UK. In the 10 years to Q4 2018, since the global financial crisis, house prices in the South West increased by 46% compared with a 43% increase across the UK. Over the same period house prices across the UK increased by 2.5% to an average of £231,000.