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Buy-to-Let and Off-Plan Developments in Manchester

20 reasons to invest in Manchester Property in 2016

Key Findings from HSBC's UK Buy-to-Let Market Analysis June 2015

  • Manchester offers the highest rental yields (7.93%) of any city in the entire UK
  • The city is now the UK's top buy-to-let hotspot - up from 2nd place in 2014
  • Annual rents in Manchester have risen 4% from £8,316 in 2014 to £8,628.
  • 26.85% of Manchester's housing stock is privately rented, the largest % of all locations.
  • The top three Buy to Let hotspots are in the North of England; the worst yields in London

Manchester only saw a small increase in average house prices during the last year to 1st June 2015 (up from £104,244 in 2014 to £108,870) but the city has maintained a very strong rental demand. Annual rents in Manchester have risen 4% from £8,316 in 2014 to £8,628. More than a quarter of all housing stock is privately rented (26.85%), which is the largest proportion of privately rented housing of all locations examined by HSBC in the UK.

More and more property investors are beginning to invest in the North according to HSBC, drawn by high yields, especially compared to the lower yields available in the South: the top three cities with the best rental returns in the UK right now - and therefore the best return on investment (ROI) - are Manchester, Hull and Blackpool.

According to HSBC's research the following list of cities offer the key opportunities that help to create the perfect buy-to-let investment with long term capital appreciation in mind: low house prices coupled with a strong demand for rental property from young professionals and - in Manchester's case - from the largest student population in Europe.

Top 10 buy-to-let hot spots by rental yields at June 2015

Location Rental Yields % Privately Rented
Manchester 7.98% 26.85%
Hull 7.81% 19.02%
Blackpool 7.35% 24.16%
Forest Heath 7.26% 21.80%
Coventry 7.20% 19.02%
Southampton 7.13% 23.42%
Nottingham 7.04% 21.64%
Liverpool 6.56% 21.75%
Cardiff 6.38% 20.32%
Portsmouth 6.36% 22.28%

Land Registry's Market Trend Data for Manchester and N-West. Released: 1st June 2015

  • House prices in the North West rose by 2.1% during April to an average £113,301 - according to Land Registry completion figures
  • House prices were steadier in Manchester city centre, up just 0.4% month on month and up 4.5% over the past year
  • Greater Manchester prices remained flat month on month but up 2.8% over 12 months
  • Repossessions in North West decreased by 39% to 145 homes compared with 238 in February 2014
  • The number of completed house sales in England and Wales decreased by 17% to 54,103 compared with 64,994 in February 2014
  • The number of properties sold in England and Wales for over £1 million decreased by 18% to 722 from 882 a year earlier
  Region Monthly change
since March 2015
Annual Change
since April 2014
Average Price April 2015
North-West 2.1% 2.3% £113,301
Gtr Mcr 0% 2.8% £108,630
Manchester 0.4% 4.5% £99,454

A pro-active Manchester city council has established 5 regeneration zones that, along with the city-centre itself, cover the entire city. It's no exaggeration to say that Manchester is just getting its second-wind as it enters the greatest period of regeneration the city has ever seen. Many share the view that the revival and re-invention they are witnessing marks Manchester's greatest achievement since the time when cotton was still king. After 150 years of steady decline post the high-water marks of the Industrial Revolution, the city has found a way to re-invent itself as a modern metropolis.

The new Conservative government, keen to turn as many Northerners as possible into conservative voters by the next election, has pledged to create a 'Northern Powerhouse', devolving power from Westminster direct to Manchester and the North. The environment for business is therefore positive.

Manchester's Central Business district is home to the largest regional concentration of professional and financial services in the UK and remains in an expansive mode.

Manchester's central UK location, linked to a well-planned transport infrastructure, has effectively created a national and international super-hub for the North of England.

Manchester Airport, the largest airport in the UK outside South East England, is the primary gateway for the North of England.

Manchester's ever-expanding tram-system connects increasing numbers of suburbs directly to the city centre each year, offering fast, clean, efficient, traffic-free routes straight into the beating heart of the new metropolis.

The city is regarded as a 'centre of excellence' for both learning and research.

Manchester is home to the largest concentration of students in Europe.

Only 212 new residential units were delivered for occupation in Manchester in 2013.

Residential development is currently at a 5 year high. Yet there are still only 1426 new units under construction in Manchester as we enter 2015 with 23 developments under construction.

Manchester needs 55,000 new homes by 2027 - which would equate to 4583.3 new homes being delivered each year over the next 12 years. In early 2015 the city is therefore at only 30% of desired annual sales numbers required each year (on average) to reach the 55,000 target on time.

Demand for new flats and houses in Manchester remains high whilst supply remains limited. This situation looks unlikely to redress itself for the forseeable future.

The latest Mid-Year Estimates for population numbers - (for 2013, released on 26 June 2014 by the Office for National Statistics) - put population growth in England and Wales at 0.63% between 2012 and 2013 and the growth in Manchester at 0.71%.

Manchester's MYE population has been growing steadily from 422,900 in 2001 to 514,400 in 2013 (the last-published figure), an increase of 21.6%, or 91,500, in twelve years. Since then the population of Manchester is estimated to have risen by at least 4000 people per year.

Indeed the latest national immigration figures released on 21st May 2015 reveal that net immigration to the UK during 2014 amounted to 318,000 people. About 7% of this number - amounting to 22,260 individuals - are believed to have settled in the Greater Manchester area during 2014. The same numbers are expected for 2015 as nothing has been done so far to change the situation post the election. It's little wonder that demand for housing in Manchester city centre and the Greater Manchester area in general continues to exceed supply.

The Young City with 'Golden' Demographics - 60% more 25 - 29 year-olds live in Manchester compared to the rest of the UK

The chart below shows that Manchester has a significantly younger population than both Greater Manchester and when compared to the rest of England with almost double (13.3%) the number of 20 to 24 year-olds and 60 percent more 25 to 29 year-olds living in Manchester compared to the rest of the UK. Such high numbers of young professionals - the perfect tenants for buy-to-let landlords with city centre flats to rent - are the happy result of two factors working together in harmony: 1. Manchester is a home to the largest number of students in Europe, 2. Because so many post-graduates particularly enjoy their three year stay in the city, many then decide to get a job in Manchester and to live in the city permanently. The universities effectively provide a stream of newly qualified young professionals ready to fill the many corporate vacancies arising from growth opportunities, offering a conveyor-belt of talent at hand to fill the staffing requirements of the largest regional concentration of professional and financial service companies outside London.

New flats and houses on the new developments in Manchester are snapped up as they become available as increasing numbers of young people aspire to city-centre living - just as they do in London. Demand continues to outstrip supply and that supply squeeze looks likely to persist for the forseeable future. It's fair to calculate that Manchester should continue to offer the buy-to-let landlord amongst the very best rental returns of any city in the UK, particularly whilst house prices in the city remain so competitive compared to London that the average yield on rental property in Manchester is now three times higher than that achievable in the capital.

The city's reputation for rain-lashed weather is much exaggerated - by 28% to be precise. Manchester averages 810mm of rain per year compared to the UK average of 1126mm per year.

And finally, Manchester usually offers the most exciting brand of football to be seen anywhere in the UK - you're surely not going to argue with that one, are you?!



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* Data provided by: manchester.gov.uk, HSBC Buy-to-Let Hotspots, Land Registry, Office for National Statistics, Deloitte Manchester Crane Survey 2014, Metoffice.gov.uk Manchester.gov.uk Performance and Intelligence Report, Chief Executive's Department 2014 Office for National Statistics: Migration Statistics Quarterly Report, May 2015 HSBC's Buy to Let report utilises official data from the Land Registry and Office for National Statistics with rental data provided by Home.co.uk.