Why Manchester is top of the list for UK property investment
Property for sale in Manchester offers some of the best investment opportunities in the UK today. The city is set to boom over the next few years – thanks, in part, to its position as the engine room in the Northern Powerhouse – and the Manchester region benefits from incredibly strong property fundamentals. If your goals are for great income from a long-term investment that also provides superb capital growth potential, Manchester could be the city where you should be investing.
In this article, you’ll discover why property investors are targeting Manchester for its incredible rental yield, and why the yield is likely to remain high.
Manchester – where rents are increasing and rental yields are highest
Last year, in its Rental Britain Report, Savills placed Manchester in the top spot for buy-to-let investment opportunities based on the following criteria:
- Analysis of the prospects for future economic growth and job creation
- Housing supply and demand, based upon population growth, housing completions, and housing projects
- The rental market, and the growth of the private rented sector
- Investment potential, calculated from rental yields, rental growth prospects, and capital growth potential
It found that Manchester rents are increasing at about twice the national average.
Currently, the average rent in Manchester is £934 (home.co.uk). With the average property price of £182,264, the average rental yield in Manchester is 6.15%. It is the highest average yield in the UK and compares with London’s average rental yield of around 4%.
Will yields remain high in Manchester?
While it’s impossible to say that rental yields in Manchester will remain at current levels, the population growth and demographic changes in the rental population are very positive for its prospects. The number of sharers and young professionals moving into Manchester and looking for quality rental properties is likely to increase, especially with the massive investment taking place here as the Northern Powerhouse project gathers momentum.
As demand grows, rental prices are unlikely to fall in Manchester. The prospects for capital growth are good – any fall in rental yield is likely to be determined by the rise in property values. Hence, investors are getting fired up about property for sale in Manchester.
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Why is demand for investment properties likely to remain high in Manchester?
The massive investment by government, local authorities and businesses in Manchester is creating jobs and pushing population growth. The population here is forecast to increase from 2.8 million to over 3 million by 2035. The number of jobs is forecast to grow by almost 4% over the next five years alone. More than 10,000 new build homes every year for the next 18 years will be needed to keep up with demand.
Manchester benefits from some of the strongest property fundamentals in the country:
- Manchester is a mecca for retail therapy. It has some of the best and most famous shopping centres in the UK, and a plethora of boutiques and independent stores.
- Manchester’s entertainment scene is unrivalled outside of London. Manchester Arena is Europe’s largest indoor concert venue. The city boasts more than a dozen cinemas and tens of museums and art galleries. It is also within easy reach of some of the UK’s most outstanding areas of natural beauty, including the Lake District, Peak District, and Yorkshire Dales. Sports facilities are limitless.
- For families, Manchester’s educational options are comprehensive. Children from the age of two through to 18 and older are completely catered for, with some of the best educational facilities in the country and a university network that has produced 25 Nobel Prize winners.
- Manchester boasts the UK’s second largest economic region in the UK after London and produces 3.5% of the entire nation’s GVA. It’s a powerhouse of job creation, with a diverse and rapidly expanding economy which makes it well protected against the economic downturn.
- The city is one of the best connected in Europe, with extensive road, rail, and bus networks as well as an extensive canal network. Manchester Airport, which was ranked the UK’s best airport at the 2015 Globe Travel Awards, is just minutes from the city centre.
- Manchester is benefitting from its status as being the first UK city to take advantage of the devolution of power and financing from the central government. The Greater Manchester City Deal makes billions available for investment here, supporting urban regeneration and the creation of enterprise zones and thousands of jobs.
Is now the time to buy property for sale in Manchester?
As the investment potential in London is receding, property investors are increasingly confident about the prospects of regional cities. It’s not that property investment in London is dead – it’s not. But after so many years of outperformance, it is now the turn of cities like Manchester and Birmingham to take centre stage.
Manchester could be the UK city with the best residential property investment potential. Certainly, the mismatch between the demand for rental properties and their supply has been the main contributor to the exceptional rental yields and growth in rental prices in Manchester. And this looks set to continue.
We’ve found that:
- The rental yield in Manchester is over 6%.
- Manchester property prices increased by around 11% between June 2016 and June 2017.
- At an average of approximately £182,000, Manchester’s residential property is around 22% below the national average.
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