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MANCHESTER and UK PROPERTY INVESTMENT

PROPERTY MARKET INTELLIGENCE 2008

The Manchester Property Guide market intelligence page provides detailed, useful, long and short-term research into the Manchester and UK property investment market for those interested in investment property in Manchester, UK and the surrounding area, with a focus on price trends for property in Manchester.

1. National slowdown causes concern but Northern cities stay strong in late 2007
The property market experienced a slowdown in the final quarter of 2007 with annual percentage changes in house prices falling to an average of 0.5% in December. However, all of the Northern regions of the UK saw an acceleration in house price growth during the last three months of the year. (Fionnuala Earley, Nationwide)

House Price Growth 2007
Location % change 2007 Price in 2007 Q4 Price in 2006 Q4 £ Change per day Ranking by price 2007 Ranking by price 2006
Birmingham 1% £179,726 £177,310 £7 23 23
Coventry 5% £173,626 £164,777 £24 27 26
Leeds 2% £195,521 £191,012 £12 19 17
Liverpool 3% £157,632 £153,528 £11 £29 30
Manchester 4% £206,181 £198,620 £21 16 15
Sheffield 1% £181,630 £179,883 £5 22 22
London 16% £329,007 £283,554 £125 3 3
Table showing house price growth in UK towns and cities in 2007. Source: Nationwide.

2) Seller’s market may weaken in 2008
Following the American sub-prime mortgage crisis and its effect on Northern Rock Building Society, it is expected that the market will continue to show slower growth than in early 2007 during the first months of 2008; however, Nationwide’s, chief economist, Fionnuala Earley, believes that ‘lower interest rates will probably help market activity recover somewhat later in 2008, as lower house price growth restores some affordability and allows pent-up demand from first-time buyers to be released”. Though the market may not recover its earlier energy, it is expected that 2008 will see the market more stable than earlier in the year.

3) Rental market at strongest levels in 5 years
According to the Association of Residential Letting Agents, national tenant demand is at its highest level in five years. While house prices have risen twice as quickly as earnings since 1990, leaving mortgage costs in mid 2007 at 32.5% of first-time buyers’ household income, rental costs have continued to rise in line with earnings (Hometrack) meaning that the rental market stands to attract more tenants if the predicted credit squeeze of 2008 sees a drop in first time buyers. The strong student and young professional populations of Manchester and Liverpool also keep the rental market buoyant.

Young professionals and students population 2005-06. Gross investment yields Q3 2007

4) Residential properties remain strong investment in Manchester city centre
Investors continue to be drawn to Manchester as planning consent was given to two major development areas in the region. 3,668 residential units are to be built in new urban village New Islington (Ancoats) and around 5,000 units are to be built in Salford Quays for the creation of the new Mediacity:UK development. Both developments follow the trend for strong investment at the higher end of the market for city centre apartments – while lower-specification one and two bedroom apartments are experiencing a slowdown in price rises, high specification developments continue to attract investors looking to take advantage of the buoyant rental market in Manchester, fuelled by affluent young professionals who move regularly between premium schemes such as Skyline Central and The Met.

5) The gap in the UK Housing Market means property should remain a long-term investment.
Despite the government having raised the annual medium-term house building target in England to 240,000 in an effort to reduce affordability constraints, there is much scepticism over whether these targets are achievable. The gap between supply and demand means that despite the current slowdown in house price rises, properties should still remain a good long-term investment for the future.

House building shortfall estimates, Nationwide.