Over the last few years, few places in the UK have experienced a boom quite like that seen in Manchester. An influx of tech companies and startups, inspired by the move to the city by larger corporations like the BBC and the rise of Media City, has meant Manchester being boosted significantly.
Quite simply, more jobs across Manchester in the last few years has meant more people looking to live in the city. And as more skilled graduates have come to live and work in the city, the need for a rising number of rental homes to accommodate their needs has also come to the fore. It’s meant investors in Manchester being able to snap up buy-to-let properties for less than they would pay in traditionally strong areas, and with the promise of not only strong rental returns in the short term, but also substantial long-term prospects.
Even now, around five years on from Manchester first showing signs of becoming the property powerhouse it now is, the prospects are still there. And even though cities like Leeds and Liverpool may have stolen the headlines in the very recent past, reports and forecasts indicate that Manchester remains the north’s hotspot.
According to new data published by JLL, continued growth in Manchester over the next few years is going to be driven by the rise of people coming to live in the city. As more jobs continue to become available, more skilled people are going to be coming to the city, and they all need somewhere to live.
Strong demand for property
JLL said that over the next four years to the end of 2021, Manchester will see as many as 300,000 new households created every year, putting it ahead of both Leeds and Liverpool with 220,000 and 200,000 respectively.
This is good news for investors, because a rise in household numbers means a rise in demand for property, and this in turn means stronger returns. In the city centre in particular, the wealth of young professionals and students means that two-thirds of people live in rented accommodation. It makes Manchester the ideal buy-to-let investment hotspot.
Rental returns are the biggest driver of investment in any city’s buy-to-let sector, and it’s here that Manchester really comes into its own. It’s seen consistent growth of more than five per cent in each of the last three years, and this is a trend set to continue for the next few years at least.
According to JLL, in 2017, rental prices are going to climb by three per cent year on year in Manchester, before following this up with growth of 3.5 per cent, four per cent, four per cent and 4.5 per cent each year between now and 2021. It will mean that in the space of just four years, the average rental price in the city will grow by some 20.5 per cent.
For investors, this shows fantastic potential in the market, as when prices rise in this way, it means a climb in revenue year after year, giving people fantastic returns on their investment in Manchester, even if they get on board years after the city first found its property market feet.
Good capital growth potential
It’s not all rental income, of course. Capital gains are the other big driver behind investment, and while rent and gains don’t always go hand in hand, in Manchester they definitely do. According to the report, house prices are set to climb even faster than rent over the next four years, finishing with growth of 28.2 per cent between 2017 and 2021 alone.
It means that investors in the sector will not only be seeing their properties becoming more valuable from a rental market point of view, but if they choose to later sell what they’ve invested in, they know that the profits are there.
For some time now, Manchester has been one of the strongest property markets anywhere in the UK. But it’s not over yet. As the predictions show, from both rental and capital gains points of view, Manchester is set to grow for years to come, driven by underlying strength and incredible business prospects, bringing new jobs, new people and new investors to the north-west.