Rents in Manchester city centre rising at fastest rate outside of the Capital

August 30, 2023

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Article Summary

Manchester
  • House prices in Manchester experienced a notable 4.9% upswing, securing the second-highest position among the 'big six' cities.

  • This market behaviour is influenced by Manchester's population growth of 9.7% and a noteworthy 28% surge in employment.

  • Marcus Dixon, director of UK residential research at JLL said: "Younger residents and students are continuing to drive demand across the UK's regional cities, as they prioritise the neighbourhood in which they live and access to key amenities.

Introduction

Earlier this month, we wrote about a recent report by global property advisor JLL that sheds light on the dynamic property landscape in the UK, but today we’re going to put a particular focus on Manchester city centre, and how this can benefit investors.

In the span of the last year, the cost of renting apartments in this vibrant locale surged by an impressive 19.6%, marking the steepest escalation among the prominent ‘big six’ cities outside London – a group encompassing Birmingham, Leeds, Bristol, Edinburgh, and Glasgow.

For potential investors eyeing the city’s potential, it’s noteworthy that during this same period, house prices in Manchester experienced a notable 4.9% upswing, securing the second-highest position among the ‘big six’ cities. The report delves into the driving forces behind these changes, attributing the rise in rental rates to sustained demand from young professionals, both domestic and international students, and a substantial reduction in available properties.

Manchester regeneration

Property prices surge

The report goes on to highlight Manchester’s remarkable performance in terms of rental growth for different property sizes. Three-bedroom properties showcased an impressive 33% average annual rental growth, outshining their one- and two-bedroom counterparts. This growth trend emphasises the increasing demand from families looking to establish a more extended stay in the heart of the city.

In conjunction with the flourishing rental market, the sales market also exhibited substantial gains. Particularly, two-bedroom homes experienced an average value increase of 7.4%, though the average cost of prime two-bedroom properties dropped by 2.5% over the same duration. This market behaviour is influenced by Manchester’s population growth of 9.7% and a noteworthy 28% surge in employment, collectively exerting heightened pressure on the local housing scene.

The report’s key findings reveal that the average cost of renting an apartment in Manchester’s city centre has now reached £1,225, representing a 25% increase. Meanwhile, a two-bedroom flat commands £1,600, reflecting a 14% uptick, and a three-bedroom option now costs £2,200, marking an impressive 33% escalation.

Shifting focus to property sales, the average sale price for a one-bedroom house now stands at £223,500, enjoying a 4.4% upsurge. A two-bedroom property commands £309,000, showcasing a 7.4% appreciation, while a three-bedroom home reaches £374,000, marking a 4.2% gain.

 

Big names in Property speak

Louise Emmott, managing director at Kingsdene, highlighted the surge in inquiries for city centre properties across both sales and rentals. She underscored the influence of students, young professionals, and families in driving this demand and underlines the impact of market factors such as the conclusion of the Help-to-Buy scheme and rising mortgage rates on rental renewals.

Marcus Dixon, director of UK residential research at JLL, underscores Manchester’s allure to various demographics, highlighting the need to address the ongoing supply-demand disparity, stating: “Younger residents and students are continuing to drive demand across the UK’s regional cities, as they prioritise the neighbourhood in which they live and access to key amenities.

“This is a trend that we expect to continue, particularly as young professionals seek employment opportunities outside of the capital due to cost of living pressures.

“What has become clear through our analysis is that neither the sales nor rental market is currently able to keep up with demand.

“With fewer landlords entering the market, and the rate of new builds slowing, government intervention is needed to restimulate the market and ensure that there are enough homes for the people that need them.

“By creating opportunities for people to live and work in our regional cities, it will stimulate further inward investment and contribute to the success of our cities long term.”

Manchester city centre

Conclusion

In conclusion, this report from JLL provides valuable insights for property investors keen on Manchester’s real estate market. It emphasises the growing demand from diverse demographics, and the continuing positive trend that it keeps having on the city.

It also highlights the rental and sales market trends for readers, and the need for strategic intervention to ensure an adequate supply of homes to meet this burgeoning demand. Until that happens though, savvy investors would spot this as a key time to enter the Manchester property market to take advantage of the extremely competitive rental yields and capital appreciation that can be gained through a quality Manchester investment.

To find out about more of some of the most attractive new-build and regeneration projects that Manchester has to offer, click here.

To learn about the property investment opportunities above, or to find out more about how property investment works, get in touch with the experts at North Property Group today.

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