Lying within the UK’s second most populous urban area, Manchester is one of the country’s most important cities. It has been ranked by the Globalization and World Cities Research Network as a beta world city, making it the highest ranked British city other than London.
Manchester is in the midst of a sharp expansion of its population, which is expected to reach 625,000 by 2025. This is excellent news for buy-to-let property investors in Manchester. According to Centre for Cities, Manchester is at the forefront of the revival of city centre living in the UK, with young professionals (those aged 35 and under who hold a degree) driving that growth.
Over the coming decade, the Greater Manchester area is expected to grow increasingly quickly, with analysts working for the city’s town hall forecasting a population increase of 20% by 2025. Rental property in Manchester is clearly going to be in much demand over the coming decade.
The reasons for Manchester’s rapid growth are varied. The city is at the heart of the UK government’s Northern Powerhouse policy, for which Prime Minister Theresa May announced a newly-allocated cash injection of £556m in January 2017. The initiative seeks to redress the UK’s north/south divide and focus investment on the northern half of the country.
The Northern Powerhouse focuses on improved transport links and the diversion of money and power in order to grow local cities. Manchester is pegged as the main beneficiary of the approach, having been handed a far-reaching package of powers by Chancellor George Osborne. An elected mayor, to be in place by the end of 2017, will lead the city in its new flagship Northern Powerhouse status.
Manchester already enjoys a decent transport infrastructure, including international connections. Passenger numbers exceeded the 25 million mark at the city’s airport in 2016, making it the third busiest airport in the UK (and the busiest outside of London).
Longer-term international transport connections are also promising. The UK’s new high-speed railway system, known as HS2 and due for completion by 2033, will deliver a Manchester to Paris journey time of just 3 hours 38 minutes. Domestic journey times will also be slashed, with travel from Manchester to Birmingham reduced to just 1 hour 8 minutes.
Regeneration in Manchester has enjoyed significant funding in recent years. The recently completed Spinningfields area of the city centre showcases the best of contemporary city planning, with world-class retail and leisure facilities benefitting all those who live in and visit the city, as well as buy-to-let investors in Manchester who are keen to profit from its property market.
The forward-looking local government has focused on attracting foreign direct investment (FDI) for Manchester and using it to the city’s advantage. According to the EY Attractiveness Survey UK 2016, “Manchester has been the leading recipient of FDI among England’s major urban centres in every year since 2009.”
Manchester’s growing economy is a source of pride for the city’s residents. According to figures from the Office for National Statistics, Manchester’s metropolitan economy is the second biggest in England. The Manchester Evening News reported in 2015 that the city was growing faster than Paris, Tokyo and Dubai.
Swift population growth and a backlog from several years of housing undersupply have combined to mean that Manchester’s overall backlog has now reached over 40,000 homes. The pressure this has put on supply has thrown into sharp relief the need for plentiful accommodation as demand spirals.
Along with the rest of the UK, Manchester is experiencing a decline in owner-occupier levels within its property market. Nationwide, home ownership fell from 65% to 64% between the 2012/13 and 2014/15 English Housing Surveys, published by the Department for Communities and Local Government. More good news for those investing in buy-to-let property in Manchester!
As owner occupier levels decrease, rental levels rise. With city living experiencing a sustained renewal, this has created an exciting environment for buy-to-let investors in Manchester who are seeking to profit from property. Property prices in the city rose by 8.9% in 2016, the second fastest rate in the UK. The undersupply of rental property in Manchester also means that home price inflation in the city is at its highest rate for 12 years.
Buy-to-let investors in Manchester have come to the rescue of the city’s booming population of renters, with a range of high quality buy-to-let offerings in the past few years. However, the sharply increasing population means that a great deal more buy-to-let property in Manchester is required in order to meet tenant demand.
The impact of this is already being felt, with Manchester included in the UK’s top ten postcode districts for buy-to-let by yield in 2016, based on figures from the TotallyMoney Buy-to-Let Yield Map.
The city’s unique situation has made it the ideal place for buy-to-let investors in Manchester who are looking for a combination of capital growth, strong demand and competitive yields, not just for the short-term but (thanks to the vastly increasing population), for the longer-term as well.