Property Investment Manchester – A Comprehensive Guide

Manchester’s property market has gone from strength to strength in recent years, experiencing growth in both house prices and rental yields.

The city’s prospects look bright, too, and there are a number of compelling reasons that make it an attractive destination for investors—from a thriving job market to a strong reputation in higher education to redevelopment projects changing its skyline.

Whether you’re a seasoned investor or new to the property scene, here is why property investment in Manchester should be on your list.

Property Investment Manchester: An Overview

What has made Manchester a popular investment destination in recent years? As investors look to the north, Manchester stands out for several reasons:

– Rapid Population Growth
Manchester’s population has surged significantly in the last decade. As of 2024, it has grown by over 15% to 549,900, marking a significant increase since 1981, making it one of the fastest-growing cities in the UK . This population boom signals a rising demand for housing and increased rental yields.

– Strong Economy
The city’s economy has witnessed remarkable growth, with a projected average annual Gross Value Added (GVA) growth rate of 2.5% between 2024 and 2026. Investment in Manchester’s economy has skyrocketed, making it one of the UK’s fastest-growing cities .

– Infrastructure Development
Over the past 10 years, Manchester has seen substantial investment in infrastructure. Major projects like the Metrolink expansion and Manchester Airport’s development have enhanced connectivity. These improvements have made the city more accessible and attractive for residents and businesses.

– Student Population
Manchester is home to several world-renowned universities, attracting a large student population. The student population currently stands at 34,100, increasing the demand for rental properties. This demographic provides a stable market for investors .

– High Rental Demand
The rental market in Manchester is robust, with high demand and competitive yields. Rental prices have seen a consistent upward trend, offering investors attractive returns. The city’s diverse population, including professionals and students, ensures a steady rental market.

– Future Development Projects
Manchester continues to attract significant future development projects. Plans for new residential and commercial spaces are in the pipeline, promising continued growth. These future developments present opportunities for long-term property investment gains.

Overview of the Property Market in Manchester

Manchester property investment comes with its nuances, which investors should be aware of. Some recent trends in the Manchester property market include the following:

– Rapid Rental Price Increase
Manchester’s rental prices have significantly risen. Studio apartments experienced a roughly 10% increase in just one quarter in 2022, pushing average studio rents above £800pcm for the first time. This upward trend in the rental market shows no signs of abating, indicating a solid rental demand.

– Strong Property Market Growth
The Manchester property market experienced a growth of 4.5% in 2023. This growth rate is higher than in other UK areas like Liverpool and Leeds, indicating Manchester’s strong market performance. Investors owning properties in Manchester are likely to see capital appreciation, making the city an appealing investment destination (Source: RWinvest).

– Significant Urban Regeneration
Manchester has undergone extensive urban regeneration, improving its livability and attracting more investment. Key projects like MediaCityUK, NOMA, and Spinningfields have transformed the city, enhancing its appeal and increasing property values.

– Housing Shortfall and Population Growth
Despite new apartment completions, Manchester faces a housing shortfall. The city centre’s population is predicted to exceed 100,000 by 2025, increasing housing demand. This trend is expected to drive property prices and capital gains, particularly for off-plan real estate.

– Economic and Job Market Growth
Key industries like technology and media drive Manchester’s job growth. The city’s economy, valued at about £75 billion, attracts young professionals and families, increasing the demand for rental properties .

– Future Price Boom Predictions
Manchester’s house prices have grown rapidly, with a 10.8% increase over the last 12 months. Predictions suggest a further 25.8% growth in house prices over the next five years, positioning Manchester among the UK’s top-performing cities for property investment .

– Future House Price Predictions
Predictions for the future of the Manchester property market are optimistic. House prices are expected to grow by 19.3% between 2023 and 2027, with rental values also set to rise by 21.6% in the same period. This growth is influenced by the city’s significant shortage of properties, indicating a robust future for the Manchester property market .

Neighborhoods for Property Investment in Manchester

From student accommodations in Fallowfield to modern living in Salford Quays, Manchester offers diverse investment opportunities catering to different investor profiles. Here are some of the most popular and lucrative neighbourhoods for investment.

Salford Quays

Average House Price: £229,086 (2024)
Average Rental Yield: 8.90%

Salford Quays has seen significant regeneration, including the expansion of MediaCityUK. It offers strong rental demand due to its proximity to the city centre, superior transport links and modern amenities. The area is popular among young professionals and is expected to grow, making it a prime location for investment.

Fallowfield

Average House Price: £281,099
Average Rental Yield: 11.56%

Fallowfield is a student hotspot located just three miles south of Manchester’s city centre. It has easy access to the University of Manchester and Manchester Metropolitan University. The area offers a mix of property types, including terraced houses and purpose-built student accommodations, making it ideal for investors targeting the student market.

Old Trafford

Average House Price: £290,623
Average Rental Yield: 4.65%
Known for Manchester United and its cultural diversity, Old Trafford has seen a 5% rise in house prices over the previous year. It offers potential for long-term capital growth, despite slightly lower rental yields. The area is well-connected and popular among young professionals.

Ancoats

Average House Price: £237,860
Average Rental Yield: 9.77%

Ancoats, a culturally diverse area with a rich history, has been voted one of the best places to live. It’s known for its quality of life, various dining options, and proximity to the city centre. The area appeals to young professionals, offering both cultural vibrancy and convenience.

Hulme

Average House Price: Not specified
Average Rental Yield: 6.48%

Hulme has undergone extensive regeneration and offers newer-build houses and flats. It’s within walking distance of the city centre and close to Manchester Metropolitan University and the University of Manchester campuses. This makes it a popular rental area for both professionals and students, offering strong rental yields (Source: Property Investments UK).

Key Considerations for Property Investors in Manchester

From regulatory and legal frameworks to economic factors, there are some things first-time investors should keep in mind when it comes to investing in property in Manchester.

• Planning Permissions and Regulations
  In Manchester, as with the rest of the UK, property investors must adhere to strict planning permissions and building regulations. These rules govern buildings’ size, appearance, and use, ensuring they are safe and meet environmental standards. Investors should consult the local council for guidance and obtain necessary permissions before undertaking any major renovations or construction.
• Buy-to-Let Regulations
  For those interested in buy-to-let investments, Manchester’s regulations require landlords to provide safe, habitable conditions for tenants. This includes adhering to fire safety standards, providing essential utilities and ensuring the property is free from health hazards. Regular property inspections may be required to maintain compliance with these standards.
• Stamp Duty Land Tax (SDLT)
  Investors purchasing property in Manchester must pay Stamp Duty Land Tax, which varies based on the property’s value and the buyer’s circumstances. There are higher rates for additional properties, which is an important consideration for investors expanding their portfolios.
• Leasehold and Freehold Considerations
  In Manchester, properties can be either lease or freehold, each with its legal implications. Leasehold properties involve ground rent and service charges, and alterations may be restricted. Freehold properties offer more control but come with greater responsibilities for maintenance and repairs.
• Legal Due Diligence
  Before investing, conducting thorough legal due diligence is essential. This includes checking property titles, understanding any covenants or easements affecting the property and ensuring compliance with local zoning laws.

Economic Factors Impacting Property Investment

Local and national economic changes impact property investment Manchester. Here are some key economic trends:

• Property Market Trends
  Manchester’s property market has shown resilience, with a steady increase in property values over recent years. However, market trends can vary significantly by area, with some neighbourhoods experiencing higher growth rates than others. Investors should research current market data and forecasts to identify the most promising areas for investment.
• Rental Yields and Demand
  Manchester boasts strong rental demand, particularly in areas near universities and business districts. This demand drives rental yields, but it’s important to consider factors like local employment rates, average incomes and tenant demographics. Areas with higher rental demand often yield better returns but may also have higher property prices.
• Economic Growth and Employment
  The city’s economic health directly impacts property investment. Manchester’s growing tech, creative and academic sectors are attracting a skilled workforce, boosting the local economy. This growth can lead to increased demand for housing, both for purchase and rent.
• Transport and Infrastructure Developments
  Ongoing and planned transport and infrastructure projects in Manchester can significantly impact property values. Properties near these developments may appreciate, but investors should also consider potential disruptions during the construction phases.
• Interest Rates and Financing Options
  The Bank of England’s interest rate decisions influence mortgage rates, affecting property prices and rental yields. Investors should monitor interest rate trends and explore financing options to maximise investment returns. It’s also crucial to factor in the potential for rate changes over the investment period.
• Projected Economic and Employment Growth:
  Manchester’s economy is expected to see an annual average growth of 2.5% between 2024 and 2026, outpacing the national growth rate of 2.1%. This growth trajectory places Manchester as the third-fastest growing economy in the UK during this period, only behind Reading and London .
• Rapid Employment Growth Rate
  The city is forecasted to record the fastest employment growth rate of any UK town or city from 2024 to 2026. Job numbers in Manchester are expected to grow by 1.8% per year over this period, which is higher than the national average job growth of around 1.3% per year.
• Diverse and Growing Job Market
  Manchester’s job market is strong, focusing on financial services, creative and cultural industries, and a rapidly expanding technology sector. The city’s economy has also benefited from a rise in eCommerce companies and its long-established manufacturing infrastructure. It is estimated that Manchester has over 16,000 job openings available .
• Venture Capital Investment and Tech Growth
  Manchester attracted USD 687.6 million (£540.5 million) in venture capital investment last year, surpassing Cambridge and ranking second only to London in terms of attractiveness for technology investment. This surge in investment is a testament to the city’s growing reputation as a significant cultural and technological hub in the North .
• Attractive Work-Life Balance and Affordability
  Manchester’s cost of living and work-life balance are considered superior compared to areas in the South of England, including London. This affordability, coupled with a booming economy, has led to an increasing number of people choosing to move and work in the city, making Manchester investment that much more appealing .

Residential Property Investment

Property Investment Manchester is experiencing impressive growth in the residential sector and Manchester buy to let could be a good investment option.

•  Growth and Demand: Manchester’s residential property market is experiencing impressive growth and high demand. The city’s population is growing at about 1.5 times the rate of England’s overall population (9.7% vs. 6.6%), attracting young professionals and families due to its job prospects, lifestyle amenities and affordable cost of living .
• Affordable Prices with Strong Growth Prospects: Manchester’s Property prices are cheaper than in cities like London. The average price for properties in Manchester is around £231,000, offering investors significant growth potential. JLL predicts that Manchester will experience the most impressive sales price growth of any UK city in 2024, with an estimated increase of 2.5% .
•  Regeneration and Investment: Massive infrastructure and urban regeneration investments have transformed Manchester, making it a prime location for residential property investment. Areas like Greengate Manchester and Embankment Exchange are particularly attractive due to ongoing developments .

Commercial Property Investment

• Economic and Business Hub: Manchester’s strong economy, bolstered by large business hubs and the presence of major companies like Amazon, Google and ITV, makes it an attractive location for commercial property investment.
• Rapid Job Market Growth: The city’s job market is expanding rapidly, especially in knowledge-intensive industries, making Manchester ideal for investments in commercial properties, such as office spaces and business parks.
• Infrastructure and Urban Regeneration: Major infrastructure projects and urban regeneration efforts, like the expansion of the Metrolink and MediaCityUK, enhance Manchester’s appeal as a commercial investment destination.

Tips for First-Time Property Investors in Manchester

Property investment Manchester is not something to be taken lightly, especially for first-time investors. Here are a few tips and common pitfalls investors should be aware of.

• Evaluate Market Potential
  Before investing, assess the local property market for potential growth. Look for areas with strong economic indicators and a high demand for housing. Manchester rental yields vary, so consider factors like the average price per sqm and the type of properties that are in demand in different areas of Manchester.
• Off-plan Property Manchester
  Buying properties at pre-construction, known as off-plan property, can be beneficial as they often come at lower prices with room for appreciation. This strategy, however, requires understanding the risks and timelines involved in property development.
• Choose the Right Location
  Location is crucial in property investment. Focus on areas that offer strong rental yields and have the potential for capital appreciation, especially when considering buy-to-let property Manchester. Neighborhoods in Manchester like Castlefield, Chorlton and the Northern Quarter, are known for their unique characteristics and demand in the market.

Common Pitfalls to Avoid

Investment opportunities Manchester vary. Investors should stay aware of common mistakes to set their investment up for success.

• Overpaying and Underestimating Costs: Avoid overpaying due to market fluctuations and underestimating the costs of maintaining properties, especially heritage-listed ones. Also, be aware of potential flooding risks and the impact of ongoing regeneration projects on property values.
• Neglecting Legal and Tax Implications: Understand the legal requirements of buy-to-let investments, including health and safety obligations, and stay informed about changes in landlord/tenant laws and tax reforms. Be aware of taxes like stamp duty, income tax on rental income and capital gains tax on property sales.
• Financial Planning and Mortgage Terms
  Ensure you have a solid financial plan and understand the mortgage options available. In off-plan property investment, you may need to make cash purchases in stages, so it’s crucial to have a backup financial plan if buy-to-let mortgages are not feasible.

Upcoming Developments and Projects

Property development in Manchester is on the rise. Below are the main developments and areas of regeneration.

• Major Developments in Key Areas
  Manchester is witnessing significant developments like the Great Jackson Street area, home to Deansgate Square and its tallest tower. Piccadilly East is another focal point, undergoing regeneration and attracting small businesses and creative industries with projects like the conversion of Neptune Mill.
• Continued Expansion in Key Sectors
  Projects like Island Offices on John Dalton Street and the sustainable office development in Mayfield reflect Manchester’s focus on innovative and eco-friendly workspaces. The city is also witnessing extensive developments in residential spaces, such as the 40-storey apartment block in the Viadux area.

Anticipated Changes in Property Values

What are the expected trends in Manchester property prices?

• Rising Property Prices and Rental Yields
  Manchester’s property market is expected to continue its growth trajectory, with JLL predicting a 19.3% price growth and 21.6% rental growth by 2027. This growth is driven by the city’s vibrant culture, significant regeneration projects, and a strong demand for housing, especially from young professionals and students .
• Impact of Infrastructure and Economic Growth
  The expansion of Manchester Airport and upgrades in local transport are enhancing the city’s connectivity, making property investment Manchester even more appealing. These infrastructural improvements, economic diversification, and a growing population are expected to boost property values in Manchester further, making it an attractive destination for property investment.

Is buying property in Manchester a good investment?

Investing in property in Manchester can be a good investment due to the following key reasons:

•  Economic Growth and Diversification: Manchester’s transition to a modern economy with strong sectors like digital technology and creative industries boosts property demand.
• Population Increase and Housing Demand: The city’s growing population, driven by professionals and students, heightens the need for residential properties, offering opportunities in both rental and sale markets.
• Strong Property Market Performance: High rental yields and anticipated property price growth, with projections of significant growth in the coming years, make it a potentially lucrative investment.

Why Invest in Manchester Property 2024?

The main reason to invest in Manchester property in 2024 is due to the projected growth in property value and the rental market. JLL predicts a 19.3% property price growth and 21.6% rental growth expected by 2027, outpacing many other UK cities.

Property investment Manchester can be a great decision for both new and experienced investors. With strong property price growth projections and a growing demand for rental properties, there are plenty of reasons to consider whether a property in Manchester is a welcome addition to your portfolio. To find out more about Manchester property investment, get in touch with our experts.