In property, it usually pays to keep an eye out for major new developments and moves that could transform a property market and cause it to rise. The types of new developments that can change property markets include major new building projects, infrastructure and new businesses moving in to the area.
Another type of development worth keeping a watch on is Government offices moving home. So, some important news for property markets could be the current Government’s plans to move a number of departments and ministries out of London and into the regions. The Government has plans to relocate 22,000 civil service jobs out of London by 2030.
Given the numbers (and the investment) that will be involved the property markets in these places could feel the benefit. They could likely be property hotspots worth watching over the next few years.
What are the reasons behind the relocations? The Government will say it is part of its ‘levelling up’ agenda. Likely, there could be some votes in it too. Long term there is also the possibility of saving some public money by relocating civil servants to areas where property is cheaper and wages are lower.
And why could these relocations help create property hotspots? For starters, relocated civil servants will frequently be well paid, and also have generous relocation packages. Their property buying and renting power is likely to affect local property markets. The relocated ministries and departments will most likely create well paid local jobs too which will further fuel local markets.
Government relocations are likely to raise the profile of what might be, in some cases, quite low profile towns. This might attract other commercial occupiers to those areas, enhance the local talent pool and create a virtuous circle which attracts more public and private occupiers. So the local commercial property market might benefit too.
So let’s look at where these possible new property hotspots might be:
Wolverhampton is the location for the first of the Government relocations with at least 500 staff from the Ministry of Housing, Communities and Local Government (MHCLG) expected to relocate.
Wolverhampton is something of a cheap property hotspot. It’s often overlooked by investors and developers in favour of nearby Birmingham. The average house price is currently £169,091 – around £100,000 less than the average house price in England. (HM Land Registry figures.)
Also recently announced is that Darlington in County Durham is to be the home of a Treasury North campus which could see 750 treasury civil servants based here. There could also be 500 staff from the Department of International Trade to form a new Trade North.
Darlington is also a cheap property price hotspot. The average house here costs around £139,556.
The Cabinet Office is to move 200 more jobs to York, to add to 400 civil servants already in the city.
York has seen rising property prices in recent years, but the average house price here is still only slightly higher than the England average at £276,968.
The Cabinet Office is also basing 500 more jobs at what is called a ‘second headquarters’ in Glasgow. The Foreign, Commonwealth and Development Office (FCDO) is to expand its joint headquarters in East Kilbride with 500 staff.
The area is one of the cheaper property price locations in Scotland. The average price in Glasgow is just £149,565.
Leeds is to be the location for a new UK Infrastructure Bank. It’s not known how many jobs it will provide, however. Leeds is also the new northern home for Channel 4 with 300 jobs to be located here.
Interestingly, there has been a major Department of Health/Department of Work and Pensions base in Leeds since 1993.
Once a cheap property location, prices in Leeds have risen fast in recent years. The current Leeds average house price is still a relatively low (for England) £210,315 however.
Manchester is to be a new home for the Department of Culture, Media and Sport (DCMS) with around 250 staff to be based there. It’s also reported that the Foreign Office is looking to open an office in Manchester.
The BBC is also moving around 400 London based staff to Salford, as well as to Birmingham, Cardiff, Leeds and Glasgow.
Manchester has had a fast rising property market in recent years, but the current average house price is still just £205,067. Salford is lower with an average price of £183,537.
Some commentators are reporting rumours, as yet unconfirmed, that Liverpool and Newcastle could benefit from Government upcoming relocations too.
Lastly, let’s look at past Government relocations to see if such developments really can create property hotspots.
The Met Office moved from Berkshire to Exeter in 2004. It’s difficult to establish a link, but the residential and commercial property market in what was once something of a regional backwater has boomed for much of the last 16 years. Exeter is now one of the most expensive places to buy a house in the south west, with average prices here now £278,159.
The Office for National Statistics (ONS) moved to Newport, Gwent, in 2006. Local experts will probably tell you that there hasn’t been much impact on the local market here. However, it has been reported that around 90% of the ONS staff who were previously based in London did not relocate to Newport.
The Department for International Trade’s new Trade Remedies Authority is located in Reading, although it is a relatively small unit in a large property market.
These examples probably underline the fact that it is important to consider the numbers and types of the relocated jobs, as well as the existing size of the local property market, before judging whether these Government relocations could create new property hotspots.