Manchester has been a consistent leader in the city house prices indices so far this year. But, for many who aren’t familiar with the city and investment-related reasons for property purchases, the question on their lips is: Why?
According to the latest Hometrack data, Manchester house prices rose 7.0% in May from a year earlier. That’s the highest house price gain for an English city that month and just behind a 7.1% annual rise in Edinburgh property prices during the same period.
Let’s take a look at just why Manchester has become so popular over the past year or so.
Demand remains high for the low city prices
Price and high demand. They’re two big reason for Manchester’s popularity – particularly among investors. Looking at the Hometrack Index again, its data shows the average property price in Manchester is £163,300. That places it somewhere in the middle of the 20 cities monitored by the index – eight cities have a lower average price, while 11 have a higher one.
And, Hometrack has also kindly calculated that Manchester house prices are 33% of the average London property price. In London, you can expect to pay an average of £491,200 for a home – that’s despite the narrowing price differential between the English capital and other cities as London house prices remain stagnant at best.
Meanwhile, both tenant and buyer demand in the north west city are strong. Manchester’s a big university city, which means there’s plenty of opportunity for BTL investors interested in this sector.
But it’s no one-trick pony, either. It’s also a popular destination for young professionals – new upmarket apartments can serve this market very well.
And, looking a little outside of the centre, some suburbs are in high demand with those young professionals growing up and looking to move a little further out to get more for their money – just like in London. Only, right now, home buyers don’t always have to move quite as far out as they do in the south.
Manchester’s strong local economy
Another detail that’s helping to support the buzz around Manchester right now is that it’s local economy is doing better than the UK average. Research from JLL shows that Manchester’s economic growth rate is anticipated to be around the 2.7% per year mark between 2018 and 2022.
Meanwhile, the UK average GDP rate is currently around the 2.4% annual level.
That higher rate of economic growth is good for a variety of areas including:
- House building activity.
- Redevelopment of areas close to the city.
- Encouraging overseas investors to choose Manchester over other cities.
“Manchester is now firmly established as the second most important economic hub in the UK. That point is illustrated by Manchester’s graduate retention rate – an important indicator in preventing a ‘brain drain’ of the city’s graduate talent leaving to work in other markets,” JLL’s research reads.
“Around 50% of Manchester’s graduates stay in the city for work, a rate second only to London in the UK,” the property investment experts say in their research.
JLL forecasts house price growth of 4.2% per year between now and 2022 in Manchester – much higher than the 2.4% UK average outlook.
Of course, trade and Brexit-related headwinds could mean that doesn’t come to fruition. But, it appears that Manchester is a city worth watching, at the very least.