Manchester residential property market demand continues with supply shortage
The Manchester property market has enjoyed a strong, optimistic start to the year following a highly successful 2021. The latest quarterly market report from Alliance City Living shows that asking rents are at an all-time high, the number of vacant properties is low, and development continues at a fast pace across the city.
It is always tough to predict how the rest of the year will go, and 2022 is no exception – however, the outlook remains largely positive for those investing in Manchester property.
A major trend in the Manchester market is the ongoing supply crisis facing the city. According to the report, at the moment there are just 561 vacant homes for let in Manchester, which is 1,526 fewer than at the same time in 2021 – a fall of approximately 75%.
This had an impact on the number of lets over the quarter. Fewer homes available means fewer completed deals by letting agents. However, that is not the negative for investors that it might first appear to be.
Instead, the lack of supply is pushing rents in Manchester to new highs, with asking rents increasing by 5.1% since December 2021. The end of Q1 marked the 13 consecutive months in which asking rents have gone up, and this could be good news for achieved rents over the rest of the year as well.
Furthermore, the supply issue is not likely to ease anytime soon. The number of homes due to complete in 2022 and 2023 is forecast to be lower than in 2021, giving developers and investors time to breathe, but potentially causing rents to continue to spiral upwards if demand continues as currently.
By focussing back on Q2 2022, we can see where the biggest gains were made over the last three months. Average rents in Manchester now stand at:
Studio apartments – £845 pcm (+0.3%)
One-bed apartments – £931 pcm (+5.2%)
Two-bed apartments – £1,257 pcm (+4.0%)
Three-bed apartments – £1,712 pcm (+8.4%)
By considering the above information, we can see that the desire for more space is still a motivating factor for many tenants, and that the rental growth of larger apartments reflects that. Likewise, the growth seen with one-bed apartments is similarly a reflection of a desire for increased space and privacy among people renting alone.
For one- and three-bed apartments, these average rents represent all-time highs. When considering rents as a whole, the averages cited above represent annual growth of more than two-and-a-half-times inflation.
Overall, rents in Manchester remain strong across all types of luxury city centre apartments, and are likely to continue at these high levels in the future due to the aforementioned supply issue.
To illustrate this, it is informative to look at the number of new listings in Manchester versus the number of lets. Compared to Q1 2021, there were 853 less properties listed in Q1 2022, and 272 less properties let. The number of listings and lets taking place in March 2022 is only slightly better than March 2020’s figures.
That month’s activity was disrupted by the beginning of the first COVID lockdown, and so this demonstrates the scale of the supply crisis currently ongoing within the Manchester rental market currently.
1,896 new homes have completed construction in Manchester so far in 2022, and it appears that these new homes have not remained on the market for long.
The Manchester property market is as strong as ever following Q1 2022, and all indications show that the rest of the year should be just as positive for investors and homebuyers alike. The Alliance City Living report data is just the latest evidence that Manchester is a city where you can be confident in the property market.
To learn more about buying luxury apartments in Manchester city centre, please get in touch with our team by clicking here.