Why Invest in Manchester? An In-Depth Look at Property Prices and Growth
Manchester has consistently ranked among the top cities in the UK for property investment due to its thriving population, strong rental yields, and ongoing regeneration projects. This guide will explore the factors that make Manchester an attractive location for property investment. We will discuss its growing population, expected rental yields, and any upcoming public and private investments. We will also examine the city's history of property prices and growth. This will give you a comprehensive understanding of why Manchester is a top choice for living and investing. Whether you are an experienced investor or just starting to dip your toes into the property market, this guide will offer valuable insights into the buy-to-let market in Manchester, helping you decide whether this is the perfect destination for your investment.
GVA £78.7bn
Population 2.55m
Property Growth 4.5%
Rental Growth 10%
What Makes Manchester a Popular Choice To Live
Manchester, with its unique charm and multifaceted culture, stands out as an extraordinary place to reside, not to be underestimated by its notorious grey weather and occasional drizzles. A city that pulsates with energy, it's a melting pot of cultures, vibrant music, effervescent student life, and a passion for sports. Dating back to its historic roots, Manchester was the driving force of the Industrial Revolution, its elaborate system of canals, busy railways, and thriving cotton mills evidencing this illustrious past.
Fast-forward to the contemporary era, the city continues to be a hub of excitement, renowned for its buzzing nightlife, considerable student population, thriving music culture, and fanatical sports environment. The city beautifully marries the past and the present, and this harmonious amalgamation helped Manchester clinch the title of the third-best city in the world for residence, as per recent survey findings.
The allure of Manchester is multifarious. It's an attractive hotspot for job seekers, owing to a burgeoning job market that stands toe to toe with London in terms of employment opportunities, yet outstripping the capital with less competition and a more reasonable cost of living. Industries with a multitude of vacancies span across finance, marketing, sales, retail, construction, and wholesale distribution, appealing to a wide range of professions.
A dynamic nightlife scene further boosts the appeal of the city for young professionals. With an array of energetic music venues, diverse eateries, and characteristic pubs, there's a promise of vibrant post-work activities. For creatives and broadcasters, the presence of Media City, housing giants such as the BBC and ITV television studios, makes it an attractive working space.
The city's diverse offering, from a thriving job market and affordable living to a rich cultural scene, is why Manchester continuously draws an eclectic crowd. It's more than just a good city to live in - it's the ultimate, unbeatable choice.
An Overview of Manchester's Property Market
Manchester's property market is thriving due to several key factors. The city has witnessed extensive population growth and economic development, with the presence of leading multinational companies, solidifying Manchester's stature as a strong economic hub. This substantial urban and economic expansion is undoubtedly reflected in Manchester's property market growth. JLL's Big Six Residential Development Report examines and assesses the development, rental rates, and house prices in six of the largest UK cities outside London, including Manchester, Birmingham, Edinburgh, Bristol, Leeds, and Glasgow.
The report places Manchester in a favourable light, illustrating the city's significant strides in the property sector. Manchester witnessed the second-highest average annual house price growth at an impressive 4.9%. This substantial growth positions Manchester as a very desirable location for investors looking for valuable property assets and potential homebuyers scouting for a worthy place to live. Despite population growth propelling the demand for housing, there has been a marked decrease in rental properties available in the market. However, Manchester has excelled in achieving the highest annual rental growth among the Big Six cities, with an astounding 19.6% increase noted in the year to June 2023.
This upward trend can be largely attributed to the emergence of new property developments and increasing tenant demand. On a similar note, Manchester's premium properties are also enjoying a surge in demand, recording a 25% increase in annual rental growth. This aligns with insights from the JLL Buyers and Tenants Survey, which emphasizes residents' preference for neighbourhood quality and access to essential amenities.
Adding to this dynamic environment is the presence of major global corporations in Manchester, such as Google, Amazon, Kellogg's, Jaguar Land Rover, and BNY Mellon. Their significant presence greatly contributes to the heightened property market demand. All things considered, the robust and vibrant scenario of Manchester's property market undoubtedly highlights its attractiveness as an optimal location for property investment.
Population Growth Fuelling Demand
Manchester's growing population and urban development are key factors driving the demand for housing. According to the latest revision of the UN World Urbanisation Prospects, the population of Manchester is estimated to reach 2,811,756 by 2024. In 1950, the city housed 2,422,246 individuals and grew by 0.74% last year, adding 20,751 people. It's important to note that these estimates include the urban agglomeration of Manchester, which includes its suburban areas. Manchester is the 6th largest city in the UK with a population of 530,300 recorded in 2016. The Greater Manchester area, with a population exceeding 2.55 million, is the second most populous urban area in the UK, incorporating Manchester and other cities. Moreover, Manchester has the third-largest economy in the UK and is the third most visited city by foreigners. Its population surge, coupled with urban expansion and economic robustness, is significantly contributing to the thriving property market.
Spotlight on Regeneration and Investments
The city of Manchester has undergone significant transformation in recent years, thanks to several major regeneration projects. These projects have breathed new life into the city's commercial and residential spaces, making it a more attractive location for property investment. One of the most transformative events was the 1996 bombing, which led to a comprehensive regeneration project in the city centre. This project was completed in 2002 with the unveiling of the revamped Piccadilly Gardens, which was largely funded by the private sector. The project significantly impacted the wider area and played a pivotal role in the city's regeneration.
Another significant project is NOMA, which is focused on social responsibility and urban revival. This ambitious project spans an impressive 4 million square feet and has a budget of £800m, making it the largest development project outside of the South East of England. The project champions sustainability, digital connectivity, and community engagement, serving as a model for future city developments.
The Spinningfields Regeneration project is another major development that has ushered in 20 new buildings and over 430,000 square metres of commercial, residential and retail space. This avant-garde urban quarter has swiftly become a central hub for Manchester's corporate and leisure activities.
In addition, the St John's project led by Allied London Properties promises a harmonious blend of enterprise, culture, and living. This visionary venture aims to create an environment that fosters creativity, innovation, and community. Further boosting Manchester's connectivity, Network Rail and Transport for Greater Manchester have agreed to invest in six of Greater Manchester's stations: Manchester Piccadilly, Manchester Victoria, Manchester Oxford Road, Deansgate, Salford Central, and Salford Crescent. These stations serve thousands of passengers daily and form integral links within the city and beyond. The comprehensive regeneration efforts underway in Manchester underscore the city's commitment to urban renewal, economic growth, and improving quality of life. These factors significantly enhance its appeal as a property investment location.
Average Property Prices and Historical Growth
The property market in Manchester offers a diverse range of property types for potential investors, including classic terraced houses, substantial detached houses, modern flats, and charming bungalows. The city boasts an average house price of £247k and a median price of £217k, making it competitive compared to other UK cities. It is important to understand the fluctuations and trends of average house prices in Manchester to make an informed investment decision. These prices are not fixed and can be significantly affected by various factors, including demographic changes, the number of properties available in the housing stock, and wider economic influences. For example, in 2023, the average property price in Manchester experienced a small decline, decreasing by £104 (0%).
This decrease was largely impacted by changes in mortgage interest rates, demonstrating how external economic factors can directly affect the housing market. The slight monthly house price growth of 0.5% indicates the slight instability of the market during this period. However, the recent drop in the UK's inflation rate suggests a potential cooling of mortgage rates, providing hope for the Manchester property market. If this cooling trend continues, it could result in a resurgence in average house prices, positioning Manchester back to an anticipated 5% annual property growth rate. This potential bounce-back indicates a promising opportunity for investors in Manchester's property market, suggesting a profitable future. In this complex and dynamic market, staying up-to-date with house price trends is crucial for investors. Such knowledge equips them to make informed and strategic decisions, potentially reaping considerable financial rewards. Therefore, studying and understanding these trends could significantly improve the chances of success when investing in Manchester's property market.
Expected Rental Yeilds in Manchester
Manchester has a thriving rental market with property prices that are below the national average. This means that there is potential for attractive rental yields, but it is important to know where to look. On average, long-term rental properties in Manchester offer a gross yield of 7%, though this can vary depending on the location and type of property. While these figures are only an average, seeking advice from local estate agents and letting agents can help you pinpoint more accurate pricing and achievable rents.
In some cases, higher yields of up to 14% gross can be achieved through alternative rental options like house-shares, student tenants, or short-term/holiday lets. Consider a property with a purchase price of £350,000 and a monthly rental value of £1,800. This could yield a letting return of 6.17%. A rental yield calculator can make this computation simpler. Based on our experience managing properties and sourcing deals in Manchester, serviced accommodation yields the highest returns. This is largely due to the city's popularity as an event destination and a large relocation network of workers from companies like Co-op, Amazon, Google, Jaguar Land Rover, and BNY Mellon. Nightly rates for serviced lets can be easily calculated using online portals like Airbnb or Booking.com.
Manchester Buy-to-Let Overview
Manchester is a city that is thriving with its vibrant culture, strong job market, and numerous regeneration projects. It has become an attractive location for property investment due to its substantial economic and population growth, which are driving its flourishing property market. Investors can take advantage of the city's extensive development projects and increasing tenant demand, which offer high rental yields and promising annual house price growth. Furthermore, Manchester's commitment to urban renewal and connectivity further enhances its appeal. Understanding the complexities of the property market, including the influence of economic factors and house price trends, is crucial to maximize investment potential. Whether you are an experienced investor or a beginner, Manchester presents a compelling investment opportunity with its robust property market.