The UK housing market continues to perform strongly and has retained its resilience through 2022 despite some economic uncertainty, rising inflation and an unprecedented cost of living crisis.
Many are wondering if 2022 is a good time to purchase a property, either as an investment or to live themselves – and questioning whether they should instead wait until 2023 to buy.
The end of the temporary cuts to Stamp Duty Land Tax in 2021 were meant to lead to a cooling of the market, but this may be overstated despite there being a slight cooldown as recently reported by Halifax, the Office for National Statistics and others.
However, this must be placed in context. Even with this “slowdown”, the latest data from the Land Registry shows that house prices still rose by an average of 7.8% year-on-year in June. So while the pace of growth may be slowing, prices are still going up at an impressive rate.
This makes investing in property a useful hedge against inflation and a way to help offset the impact of the cost of living crisis. In certain markets, property is performing at levels far beyond that national average and offers the investor even more.
The effectiveness of investing in property in this regard can be demonstrated by recent Rightmove statistics which show the available rental stock fell 26% compared with last year’s levels, while and monthly rental payments were now 40% higher than they were 10 years ago. At the same time, the typical mortgage payments for the same properties were up 13%.
Ensuring that your investment is profitable beyond your expenses is possibly the most fundamental part of any investment. Finding those aforementioned markets which are outperforming the average is therefore even more important than before.
One such market is Manchester, a city where supply is nowhere near enough to meet demand at a time when the economy and population are both booming.
Manchester house prices are rising above the national average. The latest UK House Price Index shows that properties in Manchester are worth 9.2% more than they were a year ago compared to the aforementioned Land Registry national average of 7.8%. Clearly the “slowdown” is not such an issue in Manchester – and the new property market forecast from Savills suggests that we could see a further 24.3% growth in the region by the end of 2026.
At the same time, Rightmove figures show that the average asking rent in Manchester went up by 23.4% in a year – from £913 in the second quarter of 2021 to £1,127 in the same period this year.
Statistics from Alliance City Living at the end of Q2 2022 confirm this and demonstrate the strong position Manchester landlords are in. The number of apartments available for rent in the city was just 664 at the end of July. This is a huge fall from the same periods in 2021 (1,000 more) and 2020 (1,700 more) and that has fed into the huge growth in rents in Manchester.
To illustrate this, consider the number of homes let in Manchester over July 2022 – 976 properties. This compares favourably to just 638 in July 2020 and 810 in July 2019, showing that the Manchester rental market has not only recovered from the pandemic, but is even outperforming the pre-pandemic highs.
The average rent for a two-bed apartment in Manchester is now more than £1,400 pcm for the first time according to the previously mentioned Alliance City Living research. On top of that, one-beds and three-beds have also reached record monthly rental levels, and studio apartments are close behind.
As with property prices, rents in Manchester are anticipated to keep going up in the coming years. The relevant forecast from JLL predicts that rents in the city will increase another 15.4% on average by the end of 2026.
This is further reason why landlords considering the latest property demands among renters should look carefully at Manchester developments for sale when making their next purchase. The fundamental point of investing is to ensure that your income exceeds your outgoings – property investment allows you to do this.
Even in a time when costs are going up thanks to inflation, the cost of living crisis and more, picking a market like Manchester will allow you to meet those costs and more, leading to a steady profit through a tough time. This is why buy to let property investment in the UK is so popular, and the available forecasts suggest that it will remain so in the future thanks to ongoing capital appreciation and rental growth.
For more information about Manchester apartments for sale and why you should invest in Manchester properties, click here to read the previous article >>