As growth in London hits a nine-year low, performance is surging in the north-west city – and this could present a huge opportunity for investors over the next three years.
- Property prices in Manchester and Edinburgh are increasing at a faster rate than anywhere else in the country
- But growth in London is currently at its lowest since 2009, with affordability and tax concerns dampening demand among tenants and investors alike
- Researchers believe this is a trend that’s set to continue over the next three years, creating an immediate opportunity for investors to take advantage of the highest growth
Is there a window of opportunity to invest in real estate in Manchester before 2021?
New research from Hometrack adds to the growing number of reports which underline Manchester’s status as one of the UK’s strongest investment cities. Property prices in both the north-west city and Scottish capital Edinburgh are currently rising faster than any other major cities in the UK.
In the 12 months to June 2018, residential prices in Manchester rose by 7%. However, growth in central London has now reached a nine-year low, falling by 4% during the same period.
The report highlights that average values are falling in more than 40% of London’s boroughs. Both property prices and rents are becoming unaffordable for both buyers and tenants alike. Mortgages are also becoming increasingly difficult to access, while new tax reforms are also deterring both domestic and international investors.
At £491,200, the typical property in London is now three times more expensive than the average cost of one in Manchester (£163,300), but that gap is continuing to narrow.
Hometrack pointed to a similar pattern between 2002 and 2005, when growth in London was weak but surged in key regional cities. Manchester, along with Birmingham, are forecast to close this gap the fastest, as a result of strong job growth and demand for real estate.
Is the same about to happen between 2018 and 2021?
“The level of house price inflation seen in large regional cities during the last peak, between 2000 and 2003, gives a good indication of how much prices may rise this time around,” commented Richard Donnell, Insight Director at Hometrack.
“If history is to repeat itself and these cities are to get back to where they were, then prices could increase by as much as 20-25%.”