Manchester awarded residential property investment hotspot

Manchester awarded residential property investment hotspot

Savills recently published a report that revealed Manchester as the leading UK city for residential property investment.

The Savills report provided an overview of the rental market across all of the UK.

The Rental Britain Report predicted that the market will keep growing by more than 1 million households over the next five years. This is forecast to happen despite all measures taken by the Government to turn generation rent into generation buy.

In 2015 investment deals of a total of £2.6bn were recorded across Britain. Furthermore, the report stated that the existing mismatch between supply and demand will continue to support the growth of rental demand.

Other than that, the review explained that investors are developing an increasing confident in regional cities and are now looking beyond London. As special investment highlights Savills mentioned Manchester in first place, followed by Reading, Edinburgh and Bristol.

It’s mainly the better opportunities and higher yields that lead investors to look outside of London, whilst the barriers for first-time buyers to get onto the property ladder stay the same.

As the main reasons the report names the requirement for a sizeable deposit and stricter lending criteria, which lead to a continuing rise in demand for rental housing. According to the Government’s English Housing Survey, the rental market has been increasing by an overwhelming 17,500 households on average every month in the 10 years to 2014.

These are the criteria the report used to allocate Manchester as the city with the highest residential property investment potential:

  • economic projects: analysis of historic and future employment growth and major growth sectors
  • investment potential: net income return, rental growth prospects and capital value growth
  • relative levels of housing supply and demand: need for housing, household projections, population growth forecast and dwelling completions
  • evolution and growth of rental market: growth of household renting privately

Giving an outlook into the future, Savills’ report points out the significant growth of 7% in Manchester’s rents in the last year, almost double the national average of 3.8%. And it expects those rises to continue across all of Britain.

Finally, the report expects to see the traditional rental demographic of sharers and young professionals continue to grow across the country but especially in bigger conurbations.

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