Properties in Leeds and the surrounding area could experience significant price growth in the coming years, according to a recent analysis. Growth is being predicted as the market comes under pressure from a shortage of new properties and space for development.
Both residential properties and offices are suffering from a serious shortage of available space, which is affecting the city of Leeds as well as surrounding areas such as Bradford, Barnsley, Wakefield, Harrogate, and York. The recent Spotlight: Leeds Cross Sector report from major property specialist Savills predicts that the result of this could be a pronounced increase in prices within the region over the next few years.
By 2021, the report predicts, the shortage of properties could equate to a deficit of 30,000 units. The region is expected to experience a significant amount of population growth over this period, thanks to factors like an increasing number of available jobs and strong retention rates for students who initially come to the area for university, and this could seriously worsen what is already a major deficit of available space. Over the same period, the report forecasts a 10% increase in the price of the average home in the region as a result of the widening gap between supply and demand.
Offices are also in short supply, and are also predicted to experience price growth as a result. The report predicts that, in just three years, the rental price for each square foot of Grade A office space in Leeds could reach £30. Of all Leeds office space completed in 2016, Savills reports, as much as 47% was already pre-let as a result of high demand and insufficient supply. The city centre has 109,000 square feet of space currently in the pipeline, which is not even half of the average annual uptake which stands at 250,000 square feet.
This is not to say there are no plans in place to deal with the shortage, of course, but these are hampered by the fact that it is not just existing properties that are in short supply but also available development space. According to Savills, the current development pipeline falls short of the estimated number of properties needed in the region by a third. In its study, the agent was able to identify roughly 60,000 residential units lined up for development in the region, including those that are currently still under application, but official estimates suggest that 90,000 are needed by 2021 in order to meet demand.
Building activity in this region, as in most areas, was hit hard by the 2008 financial crisis and this is still one of the main reasons behind the shortage. A recovery has been in progress since 2012, but this has simply not been enough to keep up with the rise in demand. Prices, at present, are roughly equal to their pre-crisis peaks at the moment, though some key locations have already pulled ahead. For example, the average property in Leeds is currently worth 3% more than it would have been before the crisis, and York’s average price is an impressive 14% above its 2008 high point.
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Hopwood House are experts in property investment, with a large portfolio of opportunities including property investments in Leeds, Liverpool, Manchester and London.
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Daniel Peacock