2017 is the year to consider Manchester buy to let property investments, as the north west is set to outstrip other areas in terms of property growth

Rics forecasts that the north west will outperform in terms of property price growth, and as rents are predicted to rise at a faster pace than house prices, now is the time to consider investment. According to Rics, rents are predicted to increase by just over 25%, whilst house prices are expected to rise by just under 20%. In part this is due to the average age of a first-time buyer being pushed up to 38, as housing becomes increasingly unaffordable.

Other factors that have contributed to an increase in demand for rental properties and therefore the price include a slow-down in the rate of new constructions, of which Savills warns will only intensify over the coming months when it predicted that almost half of London’s construction plans could fall through, and the lack of new buy to let landlords.

Manchester – the key driver of the “Northern Powerhouse”

Manchester is considered the crown jewel of the Northern Powerhouse, and it is receiving a considerable amount of investment. Areas such as Salford Quays has seen a significant amount of regeneration, and it was the focus of the largest urban regeneration project in the UK following the closure of the dockyards. With the regeneration came MediaCityUK, a mixed-use property development designed to cater towards the creative industries. This has seen an influx of new businesses, attracted to the city due to lower business rates than those seen in London.  Young professionals are moving to Manchester for work following the influx of companies resettling in the area, such as the Guardian and BBC.

The regeneration of Manchester throughout the years from the development of NOMA to Spinningfields has been phenomenal. It was one of the key drivers that caused the city’s population to increase by 19% between 2001 – 2011.

Developers are exhibiting more confidence in Manchester, buoyed by the recent sale of One St Peter’s Square to Deka Immobilien. At the time construction was commenced One St Peter’s Square was the only new development in the city centre, but its success has influenced the building of St Petersfield and the new tram site.

Businesses are attracted to Manchester due to the generally lower running costs. Average salaries in Manchester sit at just above £26,000 (£26,833) compared to £34,626 in London. Grade A office space in central Manchester is also decidedly cheaper at £35 per square foot, compared to £125 in London’s West End. With these prices, it is not surprising businesses are seeing the benefit of relocating to Manchester.

Manchester’s young population

As well as the young professionals moving to Manchester to chase jobs, a growing number of young people who have studied in Manchester are choosing to remain in the city after graduating. This has led to a dramatic rise in the number of young adults living in the city, from 86,600 in 2001 to 128,900 in 2015. Almost a quarter of Manchester’s residents are aged between 20-29, compared to an average of 13.4% in England, Manchester is a “young city”. Young professionals are not necessarily looking to throw down permanent roots anytime soon and home ownership has plummeted from 72% in 2003 to 58% in 2016, which has led to an increase in rental demand in the city. Usually, young professionals gravitate towards city centre apartments close to restaurants, bars, cafes and other amenities such as Downtown, Manchester. They are not necessarily wanting to purchase a suburbian 3-bedroom semi-detached house with a garden.

High Rental Demand and Fierce Competition for Accommodation in the City

Loan Notes Manchester Investment

Estate agents in the city have claimed that there are often 2,000 potential tenants to 130 properties, and competition is especially high for city centre flats, which can receive up to ten enquiries. Each apartment is receiving around 3-4 offers, some are let within the hour and prices in some hotspots are rising by £75 per month, with these statistics it is unsurprising that landlords can achieve decent rental yields.

LendInvest recently named Manchester as the best place to invest in to achieve good returns. The rental yield between 2010 and 2016 in Manchester stood at 6.8%, outstripping other hotspots such as Luton, Coventry and Outer London, all of which offered 5.8% rental yields.

“Manchester’s burgeoning young demographic, high demand for rental properties and 2017 predictions that the north west will outstrip other areas in terms of price growth, stands it in good stead in terms of investment.” Says investment director Arran Kerkvliet. Focussing on cities that boast these key fundamentals is a good buy to let strategy when it comes to buy to let Manchester property investments.

Main image c/o Andrew Nić-Pawełek

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