House prices in Bristol are continuing to rise at a far greater rate than the UK and South West averages, according to new research from global property experts, JLL.
Whilst a more moderate and stable housing market is predicted for the UK as a whole, the rise of Bristol’s residential property values shows little sign of slowing.
JLL’s new report The New Housing Paradigm outlines how Bristol is expected to continue to experience higher than average house price and rental growth than both the UK and South West over the next five years at 4% in 2018 and 3% in 2019 onwards, compared with a UK average of 2.5%.
During 2017 the value of a typical two bedroom apartment in Bristol rose from £260,000 to £280,000 – a rise of 7.7%. Rental prices have seen even sharper growth with average rent for a 2 bedroom flat now standing at £1,225 – 11.4% up on 2017.
Although there have been a number of new developments in recent years these have not been sufficient to satisfy demand.
Pricing of new build property in Bristol city centre has risen from an average of around £310 per square foot (psf) to £375 psf in the last three years.
This has been driven by a lack of new development, the rise of city centre living and the population increase, including the ever-growing student cohort. Population growth in Bristol has averaged 1.1% per year over the past 10 years, notably higher than the 0.8% per year UK average.
James Petherick, residential development director in JLL’s Bristol office said: “City living has gained strong momentum in Bristol over the past three years, spurred on by a number of desirable city centre schemes attracting down-sizers and re-locaters, which has pushed demand in both the sales and lettings markets notably higher. And with housing supply in the city centre constrained, prices and rents have soared.
“Demand continues to far outstrip supply, which means radical thinking is required if we are to have any chance of addressing the city’s housing crisis. Whilst taller buildings and brownfield development provide some answers, we really need to consider a greenbelt review in order to help provide affordable housing close to employment opportunities.
“Despite the remarkable price increases of recent years, we still anticipate further upward pressure over the next five years. Growth rates may not be quite as high as the past three years, but uplifts of over 3% per year are both significant and higher than UK averages. This serves to show how desirable Bristol is.”
In the prime residential market a number of schemes have been pushing pricing boundaries with Acorn and Galliard’s Brandon Yard, Bristol’s latest prime scheme to be released, understood to be attracting average reservation prices at over £650 per sq ft. The average sales value at Generator’s Huller and Cheese Warehouse scheme has been around £535 psf whilst City & Country’s The General stands at circa £530 psf.
The build to rent market in Bristol is also one of the most active across all the UK’s city centres. Demand is being fueled not only by young professionals but a wider spectrum of renters including more affluent students.
For example, Grainger has 194 units under construction at Finzels Reach, LinkCity has planning permission for a 26 storey tower housing 375 build to rent units at the Ambulance Station site while Change Real Estate will deliver 128 units to A2Dominion in phase 1 of its Redcliffe Quarter scheme; with more units to follow in phase two. Furthermore, Legal & General will build 350 rental homes at its site in Temple Quay.
These build to rent schemes are expected to be highly sought after as rental availability has been considerably lower than demand for several years now.
The predictions outlined in the report are made against a South West economic backdrop which is broadly in line with the UK average.
However Bristol is expected to be one of the strongest growing city economies across the UK, with economic growth (GVA) forecast to increase by 2.4% per year, well above the 2% UK average. Employment growth in Bristol is also expected to be double that of the national rate at 1% per year between 2018 and 2022.