Nottingham’s property market has boomed like never before in 2021. Over the past 12 months property prices have risen by 9.8% reaching a new record high average of £218,000 according to Land Registry figures. The rental market has also enjoyed an astonishing few months with rents up by 10.5% – well above the national average of 8%. This despite Nottingham City Council’s decision to increase the cost of a Houses in Multiple Occupation (HMO) licence, which means landlords will be paying more than £1,000 per property they own.
At Coversure Nottingham, Nottingham’s leading property insurance broker, we’ve seen demand for home and landlord insurance quotes go through the roof as landlords, investors and homeowners look for affordable protection for their property assets.
So what’s fuelled this explosion in demand and what opportunities and challenges lie ahead for Nottingham’s property owners? Local property market expert and co-founder of Coversure Nottingham Paul Hartle shares his thoughts on the situation and finds plenty of reasons for optimism while striking a note a caution.
Why Has Nottingham’s Property Market Become So Buoyant In 2021?
The local property market has been growing steadily for several years. If you look at the 10-year growth figures prices are up over 53%. Rents have also risen despite many amateur buy-to-let landlords selling their properties off in the wake of the 2016 tax changes. The latest surge in interest is, I believe, due to the following:
• The stamp duty holiday – currently scheduled to last until September
• Pent up demand – thanks to covid and lockdown, 2020 saw huge disruption and a massive slowdown in activity
• Historically low interest rates – at 0.1%, borrowing has never been cheaper
• Nottingham’s booming economy – EY has predicted Nottingham will grow at around 2.1% per year between 2020 and 2023. That puts it on a par with the UK’s fastest growing cities
• Continued influx of young people – a top-20 university, teaching hospital and a significant digital sector has made Nottingham a Mecca for young people and helped to drive rental prices ever higher
• Covid delaying new building projects as sites were shut down and supply chains disrupted
Who’s Buying Property In Nottingham?
While there’s plenty of internal movement with homeowners looking to climb the local ladder, the big drivers have come from outside our city. With more and more people able to work remotely so more and more have sought to leave the overcrowded and hugely expensive south of England in search of more for their money further north. Nottingham, with its fantastic facilities, great transport links and (relatively) affordable prices has attracted six thousand new residents in the last year alone (ONS) all of whom need somewhere to live.
Investors haven’t been slow on the uptake either. Seeing the population and the economy’s growth they’ve seen opportunities for good returns. For professional landlords, however, things have become quite difficult. A letting agent I know has bemoaned too many tenants chasing too few properties and landlords are finding it hard to find properties to buy. One told me that investors are offering on as many as 10 properties in the hope of buying just one.
Is Nottingham’s Property Market Changing?
Alongside the long-term trend of more and more rental property, another phenomenon has started taking place; the conversion of commercial property into residential. Post-covid demand for office space is likely to decline and offices and shops are being seen as a great way ofsolving Nottingham’s housing shortage. Unused offices in Radford are being turned into eight new social housing apartments and an application to convert 6 Castle Boulevard into flats has been submitted. These are just the latest in a series of projects, two of which are being undertaken by a commercial property landlord client of mine who believes the future is residential.
A Downside To Nottingham’s Property Boom?
I believe there is one and it’s the problem of affordable housing. Nottingham’s shortage of housing is well known. In 2018 the Council received 4,800 requests for housing, 1,300 of which were still open in late 2019 leaving a total of 9,000 people on the waiting list. There are also over 1,000 people sleeping rough with two more being forced onto the streets each week according to Framework. As prices rise so more and more people struggle to pay the rent – something that covid related job losses have done nothing to alleviate.
The Council is taking steps, including their Enforced Sale Policy to bring abandoned properties back into use. A shocking 4,000 homes stood empty in 2019 and these need to be made use of. My concern is that as prices rise so owners will sell to the highest bidder and the property prices will continue to rise.
If Nottingham falls into the trap that places like London, Oxford and Cambridge have and property becomes unaffordable then our economy could be affected as people look to places like Sheffield, Leicester of Birmingham instead.
Nottingham’s Property Market: A Positive Outlook?
While the stamp duty holiday will soon end and the pent-up demand stampede will peter out, I’d say the prospects for Nottingham’s property market are positive. The city’s economy is growing fast in the wake of the pandemic and given its diverse nature and mix of traditional industries such as haulage and logistics alongside vibrant digital and technology-based businesses, the outlook is bright.
Interest rates are also set to remain low. A Reuters poll in January found that economists expected the Bank Of England would keep rates steady at the record low of 0.1% until at least 2024. Low interest rates not only make property more affordable, but also make it cheaper for businesses to invest.
Then there’s the remote working aspect of the ‘new normal’. Free of the shackles of a commute to an office, many more people will look to leave the south in favour of more property for their pound further north. With its hi-tech business hub, cultural attractions, and easy access to other major centres it’s likely that Nottingham’s population will continue to grow.
From landlords to homeowners, commercial property investors to developers, Nottingham has something to everyone, just like the city itself.
Like Some Property Insurance Help?
If you’d like some help protecting your property, then please contact the Coversure Nottingham team. You can call us on 0115 837 0984,email the Coversure Nottingham team or click here to start an insurance quote. We have years of experience in protecting landlords and homeowners and can offer you great value cover backed by expert advice.