It’s been well publicised that average UK property prices have slid marginally over 3 of the past 4 months. May saw a 0.2% drop with similar figures in March and February cancelling out April’s 0.1% gain. 2018 is expected to conclude with average nationwide price growth at a sluggish 2%, below inflation rates hovering around 3%. From the point of view of property investors, a slow market is not necessarily a bad thing. It means bargains can often be found and returns stronger over the long run when vigour returns to the market.
It is also important to keep in mind that there is currently significant regional variation with the UK property market. Prices are not sliding everywhere nor are currently expected to over coming years. Last week we covered the renaissance in Liverpool’s city centre and dockside and the draw it is proving to be for buy-to-let landlords and property developers specifically targeting the landlord and rental market.
The property market in many of the UK’s regional cities, especially in the Midlands in north is very healthy and strong price growth forecast for coming years. Glasgow and Edinburgh were among the cities with the highest price growth last year as were Liverpool, Birmingham, Leeds and Manchester. We’ll look at the case for considering the latter as a destination to look for investment properties in.
Manchester’s Booming Economy Makes it a City on the Up
Between 2010 and 2016, Oxford Economics data shows Manchester’s economy grew 17.6% and forecasts another 15% over 2017 to 2024. Manchester has a very ‘hip’ buzz about the way it is developing. Neighbourhoods like central Castlefield are becoming ‘gentrified’ in a way reminiscent of East Central London and slightly further out areas such as Ancoats being almost completely redeveloped. Manchester City owners the Abu Dhabi United Group are behind most of the redevelopment of Ancoats, in partnership with Manchester City Council.
Residential property development has, however, lagged the upward trajectory of the city’s economy. There is now a surge in building activity but property consultants Savills say that there was very little new construction between 2009 and 2014. The 7000 new homes currently in the pipeline are below what is needed to compensate for the period of economic growth following the financial crisis and what is expected over coming years.
Manchester Property Price Forecasts
The gap between supply and demand is demonstrated by the 24.9% growth in average Manchester property prices between January 2015 and January of this year. Like Liverpool, Manchester has also attracted developers building for the rental market, expected to grow significantly over the next decades. JLL forecasts over 20% average city-wide price growth between now and 2021. The property consultants believe rental rates will see similar growth, over 20%, compared to around 13% in London.
With Manchester property prices a long way from those in London, deposits also go much further, securing better buy-to-let mortgage terms. It’s not hard to see the attraction of the ‘Northern Powerhouse’ for those casting an eye around for investment property opportunities.