HS2's Impact on Property Investors in the Midlands

High-speed train system HS2 is currently under construction in the UK. There have been delays and budget changes despite the project being highly anticipated. A growing number of concerns had been raised about the feasibility of the rail project because of rising costs, however Transport Secretary Grant Shapps announced the project will go forward. But how will this project affect you as an investor? 

Any major transit improvements will likely boost an area's appeal. The project is expected to create new jobs in Birmingham, Nottingham, Leeds and virtually anywhere within short distances of the line. Several major firms including HMRC and HSBC have already relocated to Birmingham as a result of the promise of improved transport connections

As more people choose to live and work there as a result of improved accessibility, house prices may rise, making this an attractive area for property investment. Investing in the city sooner rather than later will provide both homebuyers and investors greater capital appreciation as the HS2 scheme takes shape.

Taking examples from past infrastructure projects, the Guardian analysed how past infrastructure projects affected house prices. For instance, house prices in Warwick increased when the M40 was extended from Oxford to Birmingham in 1991. So, as an example, somewhere like Coventry could see house price increases due to its close proximity to Birmingham and Solihull, where huge transport hubs are set to be built for the project. 

Another example to look at would be Crossrail's Elizabeth Line that is set to provide transport links throughout London. Those along its route saw house prices rise by 30% to 60% more than those away from its immediate impact (within ten to fifteen minutes of walking). In addition to price increases prior to the start of operation, value is set to rise further after services begin.

On the other hand, properties closest to the line could see an entirely different effect. According to Property Road, an immediate decline in house values 500m or less from the line may occur. This is due to construction work causing disruption and increasing traffic levels, but this is not expected to be a long term drop.

If you’re planning on buying an investment property anytime soon it’s worth checking if and how the HS2 developments are likely to affect the area. We’ve seen quite dramatic changes in property value due to local infrastructure and transport projects before, so it’s worth checking before buying as there could a chance you could get a better return on your investment by choosing a property closer to, or further from the line.