With a thriving economy that is attracting both new residents
This market update primarily focuses on the demand side of the equation, as well as the supply side – that is the volume of new build homes in Manchester. We will follow up with more articles on Manchester’s economy in the coming weeks.
Manchester is expecting an influx of 128,000 new residents over the next decade, with much of this growth expected in the city centre where some 50,000 new residents are forecast to arrive over the same period.
The city’s thriving corporate, cultural, science and tech industries in particular are creating the jobs that are central to attracting these new residents. Some 57,000 new jobs have been created in the centre of the city in the last five years, with a further 36,000 office jobs expected over the next decade. Key business hub Spinningfields is at the heart of this growth, bringing new businesses to the centre of a city that is set to be a base for 400,000 jobs by 2025.
The UK’s best city to live in
In 2015, the Economist Intelligence Unit again named Manchesteras part of its annual Global Liveability Survey. To find out why the cosmopolitan city is so popular with locals, read our blog.
Alongside quality of life, a strong element of Manchester’s allure is the value for money on offer. The city now ranks as the seventh-cheapest place to live in the UK, despite being one of its largest cities. Prices are particularly low when compared with London, as seen in the increasing trend forfrom the capital. The average Manchester apartment is one-third of the price of an apartment in London, however salary differentials are nothing like this large: Manchester salaries are not far off 70% of that achievable in London.
Manchester household growth is expected to rise sharply, at an estimated 6% per annum over the next five years. This translates to a predicted need for 10,000 new homes every year over the next decade.
Against this backdrop of population growth, the numbers defining Manchester’s residential construction pipeline are set to fuel future price growth. The whole of Greater Manchester averaged just 4,500 net completions per annum between 2010 and 2015, while Central Manchester is expected to record just 2,175 new units in 2016.
This represents a massive shortfall against that annual target of 10,000 new homes, and comes on top of an existing backlog of 40,000 required homes across the city. The city’s Core Strategy document identified the need for 55,000 new units with the city centre itself by 2027, which demonstrates that even in thriving Central Manchester, which is superficially seeing a massive construction boom, the city is still a long way short of meeting demand.
While that construction boom may not be enough to alleviate Manchester’s supply problems, there has nevertheless been a huge upswing in construction in the city., demonstrating how developers have identified and are investing in Manchester’s potential.
Sales and Rentals
This supply-demand imbalance is having a continued positive impact on the city’s property investment case.
Residential developments in the heart of city are expected to outperform even this level of growth, with prices driven by the rapid migration of people into the city’s central areas.
Rental prospects perhaps look even better. The city’s growing young and affluent population provide a strong rental demographic for landlords. Private renting across Central Manchester and Salford having risen 436% over the census period between 2001 and 2011, representing growth 24% above the national average. This brings us to a point where 63% of Central Manchester households are now renting.
It is on the back of trends such as this thatin recent years. While more recent figures from the LendInvest Buy-to-Let Index show Manchester recorded the highest rental yields in the UK between 2010 and 2015 at an average of 6.02%.
Manchester in a global context
The first two months of 2016 have brought with them significant global economic shockwaves. From falling oil prices to volatility across China’s share markets, investors are more than ever looking for ways to protect and grow their wealth in stable asset classes and in safe-haven markets. As one of the world’s most established safe haven markets, it’s no surprise that for the UK, undervalued Manchester is in the spotlight.