Buying the future, not selling the past

As with any investment, it is not guaranteed how property prices will act in the future and a number of factors can influence this, from the current economy to the location.

Figures from Nationwide state that house prices have increased on average by 8% per year since 1993, despite factors such as the recession, war and political unrest. These figures suggest that the property investment market remains a lucrative choice, especially when you invest in the right areas. Additionally, if you’ve bought with the objective to let, you will receive a rent, or in other words, an income, as well as capital growth.

The ideal scenario for investors is to buy into a property before it experiences a significant increase in value (and therefore price). This can be influenced by things such as improved schools and employment opportunities in the local area, which is why gathering relevant information about the area is an essential part of investment planning.

This is one of many reasons for which the London property market has started to turn away investors. With house prices rising to such a high level, and with strong competition for even the smallest sites, real capital appreciation potential continues to be increasingly hard to realise within the London market.

Therefore, investors who want to stay ahead of the market are looking outside of London and are considering the country’s other major cities such as Birmingham and Manchester.

Case study: Manchester, UK – home of the worker bee

An example of higher capital appreciation potential outside the capital can be seen in Manchester. With an inner-city population of around half a million people and 6.5 million living within 30 miles, Manchester is widely regarded as the UK’s ‘second city’. The Greater Manchester area – which comprises of several boroughs around the main city – is the largest urban region outside of London.

Manchester has undergone an economic resurgence and is now regarded as the centre of the innovative CDT sectors which are creating thousands of jobs in the city. Over the past two years, £1.6bn8 has been invested in the city of Manchester and this is on top of the £1bn investment being made with Manchester’s airport’s new ‘super terminal’.

Within Manchester, new jobs are expected to increase the city’s inner population to 154,000 by 2022 and create demand for 35,990 homes. Visit Manchester today and you’ll notice the sheer number of cranes and construction sites dotted along the city’s skyline. Manchester has already become the largest multi-family rental market outside of London and it is expected that redevelopment of Manchester’s inner city plots will provide room for 50,000 new apartments over coming years.

Due to the growing number of jobs and expected increase in local population, experts expect rental demand in Manchester to climb significantly.

In Manchester, apartment price growth is forecast to grow at 3.1% a year, compared to 2.2% across the UK. And as a result, rental growth in Manchester is forecast to grow at 3.1% compared to 2.4% in the rest of the UK.

If you’re considering a buy-to-let investment in Manchester and would like more information, get in touch today and we’ll talk you through the process.

Sources – The Property Teacher, Statista, MIDAS, Confidentials (Manchester), Knight Knox, Greater Manchester Combined Authority, Manchester City Council