A continuous increase in the number of cranes, hoardings and skyscraper frames around Manchester’s inner ring road is visual proof of the current Manchester City Centre housing boom. As London has seen a housing market flat line, Manchester has seen nothing short of a market boom, following economic growth and millions of pounds of investment over recent years. Whilst many will see this as a huge plus point for the city and success for the city’s leaders, others have demonstrated their lack of positivity.
Residents of the Manchester area are struggling to comprehend increases to rent and overseas investor returns, as well as the ‘investor-only’ properties that prevent first time buyers from buying homes. Manchester’s Labour leaders are unsure on what is best for the region, and housing has become a hot topic in Westminster following the frustration shown by younger voters.
Who is benefiting from the housing boom?
At present, there are 10,000 apartments currently being or set to be built within the city centre, catering for young professionals coming to work in the city. Because of this, property prices have risen by 15% in the last year, with rents increasing 6.5% over the same period of time.
Property investors are seeing a real boost to the finances of their property portfolio, especially those that have owned properties for several years, even before the recent boom. Not only are they able to charge higher rental fees each month, but the value of their property has significantly increased.
The young professionals flocking to the city are also amongst those that are benefiting from the recent housing boom, despite being the ones paying the increased prices. With Manchester being a great city for business and seeing economic growth, young professionals are seeing the opportunity to live and work in Manchester as a much cheaper alternative to London. They get to experience the same business lifestyle with good quality jobs, all at a much cheaper living price and a less intimidating environment when compared to London.
Why do some not appreciate the housing boom?
Although the rental market is surging and is in a better position than ever before, the reasons for the boom are having a significant impact on the ability to buy a house as a first-time buyer. Despite having a healthy deposit to contribute towards buying their house, many first-time buyers are facing real troubles when trying to buy their home, even where money isn’t the issue in hand.
A lot of current properties for sale are set as an ‘investor only’ property or are being marketed directly to buy-to-let investors, and therefore those looking to buy their first home are being completely cancelled out.
Another issue is that with anybody already renting a property, they are likely to see increases to their monthly rental fees as a result of the housing market boom.
Landlords and investors are aware that the current market allows for them to charge higher amounts for their property, and so they do this wherever possible. As well as this, any landlords operating with short-term contracts have the ability to make regular increases to the rent, simply increasing the price when current contracts expire.
Mark Burns is the managing director of property investment firm, Hopwood House.