Manchester has proven itself to be among the UK’s strongest property market for many years, and the last 12 months have solidified its status with record breaking growth.
House prices are rising faster than ever, and rents for apartments of all sizes have reached record highs. What’s more, the projections for the future show even more growth on the horizon, making this the ideal time for investors to consider Manchester investment property.
We’ve looked at the current situation and five-year growth forecasts to answer some questions about the Manchester property market and make some realistic predictions for the future which should help answer the question: “Why invest in Manchester?”
Will house prices in Manchester continue to rise?
House prices in the North West grew by 10.8% in the last 12 months according to the latest House Price Index from the Office for National Statistics – and Manchester was the beating heart of the region’s success.
Furthermore, the JLL Residential Forecast 2022-2026 predicts that house prices in Manchester will keep growing for many years to come. According to the report, the city will see a further 25.8% growth in house prices over the next five year period. This is significantly higher than the national average and makes Manchester one of the best performing cities in the UK.
Of that, 6% growth is expected in 2022 at minimum. The city has many factors in its favour, and investors can rest assured that the Manchester market has a bright future ahead of it.
Why has there been a property price boom in Manchester?
The price boom in Manchester’s property market has been caused by the interaction between a growing population and a severe lack of supply in the market.
“Why is everyone under 30 moving to Manchester?” The Telegraph asked this January. The answer is that the lifestyle and employment opportunities on offer are world-class, but rents are still low when compared to cities like London – offering renters and investors the best of both worlds.
For example, Manchester’s technology sector is one of the fastest-growing in Europe. Recent figures from the government show that the number of jobs available in the industry increased by 164.6% over the course of 2021 in Manchester. These are exactly the sort of jobs that attract people and help explain why Manchester’s population is increasing so rapidly.
On the lifestyle side, Manchester is a regular recipient of awards celebrating its virtues. Most recently, the city was named as the third-best place in the world to live by Time Out thanks in part to the combination of its world-class cultural offering and the outstanding work-life balance on offer.
With all that in mind, perhaps it should be no surprise that estimates from Manchester City Council show that we can expect as many as 70,000 more people moving to the city over the next decade due to the above factors, with the city centre alone expected to see an additional 5,000 arrivals annually.
This population growth alone would not lead to property values rising as quickly as they are without the other half of the equation – a lack of supply.
There are already not close to enough properties in Manchester to meet demand, and the situation is only going to become more acute in the future. The latest Deloitte Crane Survey shows that there are only 10,717 properties in construction in Manchester, a fall of 1,500 year-on-year.
Completions, too, are expected to fall. Only 2,200 new homes are expected to enter the market in 2022 according to the same source, and that also compares poorly to 2021 when we saw 5,500.
With this in mind, it is clear to see how population growth and a lack of supply are pushing up house prices, and are likely to continue doing so in the years to come if the aforementioned JLL forecasts are accurate. From low-rise apartments, to townhouses, to tall towers, Manchester needs as many quality homes as it can get to meet demand over the coming years. At the moment, there are nowhere near enough in the pipeline to meet current and projected demand, leading to the impetus behind property values increasing that we can see.
What does 2022 look like for Manchester property?
2022 already appears set to be a fantastic year for Manchester investment. Manchester’s rental market entered this year on the back of a record-breaking year in 2021. There were just 525 apartments available to rent in the city according to data from Alliance City Living, compared to more than 2,000 at the same time 2020.
This was in spite of more than 5,800 new properties entering the market over the year, as mentioned above, and had the effect of pushing rents in the city to record levels. This was especially the case for one- and two-bed apartments where rents reached all-time highs at the end of last year.
Now, the latest data from Alliance City Living shows that the market has continued to grow in the vein. Dwindling supply continued to impact rents in January 2022, with rents once again being pushed higher by this market squeeze. More than 500 properties were rented in the city over the month which is far above the January average of 328, and consequently, the number of apartments available at the end of the month fell 74% compared to same time in 2021.
What’s more, the number of new flats under construction in Manchester fell in January, with just over 13,500 in the pipeline. This is 865 fewer than a year ago, and suggests that the supply-side issue which has led to growth in rents will not only remain, but become more acute in future.
Rents for studio apartments increased by 10% over the last quarter of 2021, reaching a high of more than £800 pcm for the first time at the beginning of this year. Likewise, rents for one-beds (+5.4%), two-beds (+8%) and three-beds (+4.8%) demonstrated strong growth in the three months to January.
When looking at the last 12 months as a whole, the growth in average rents for luxury apartments in Manchester are even more impressive. Studios (+18%), one-beds (+11.2%), two-beds (+18.5%) and three-beds (+12%) all saw huge rent increases over the year.
These figures show clearly how strong the Manchester market is – especially given how this is occurring in the recovery from Covid-19 – and it is worth bearing in mind that we are still some way short of the traditional busy period in the summer.
But despite being a few months away from that, the so-called ‘busy period’ might be morphing into an all-year event for Manchester if the city’s job and population growth figures are taken into account. Rightmove recorded a 36% annual increase in rental demand in Manchester towards the end of 2021, and that shows no sign of abating.
If you are looking for your next property investment, this is the perfect time to learn more about Manchester and its future. You can do so by clicking here and getting in touch with our team.
