HS2 and Its Role in Powering the Northern Powerhouse
HS2 is the biggest expansion of the UK’s rail network since Queen Victoria was on the throne. The project aims to bring cities and regions closer to one another, as well as stimulate economic growth, catalyse investment, and create jobs. Combined with urban regeneration plans across the North West, and industry advancing throughout the region, HS2 promises to be one of the leading driving forces powering Manchester, as well as other midland and northern cities, such as Birmingham and Leeds.
Once all the planning and consultation has taken place, and work finally begins, the first phase of linking London and Birmingham is set for completion in 2026. This will be followed by a section running between Manchester and Birmingham, due to be completed in 2033. Clearly, it’s a long term strategy, but one that will ultimately have a significant effect on the evolution of regional economies as the plan comes to fruition.
As well as reducing travel times, another factor that promises to transform economic performance is that of reduced costs. Given the extortionate rail prices that commuters are currently subjected to, this would be a welcome development. Travel costs aside, cutting journey times will prove massively beneficial to commuters. The Leeds to Birmingham route will slash the two hour journey down to just 57 minutes, and more than halve the time from Manchester to Birmingham, from 88 to 41 minutes.
What evidence is there that these high speed rail links will really have an effect on economic growth?
Well, if you consider the Paris to Lille link, as well as the InterCity 125 network here in the UK, you’ll notice a trend within the connected towns, cities, and regions of a positive bloom in both economy, and general vibrancy.
The HS2 is also expected to increase the UK’s GDP by at least £15bn a year, as a direct result of increased rail connectivity. Productivity gains are also expected in the region of £8bn by 2037.
Of course, what we are most interested in is how HS2 will drive property values in and around Manchester.
It’s fairly obvious that the economy is inexorably linked to the property market. With the growing economy catalysed by the new rail routes, come more businesses to move in, which, in turn, as a positive effect on population growth. Clearly, population growth drives housing demand, both in the rental and ownership sectors.
An exceptional increase in the demand for homes is expected all along the HS2 rail route. Where property prices in London have created a housing crisis that is untenable for many, the HS2 will provide a fast, simple transport route for those seeking to relocate to less unaffordable regions and commute into the capital. Not only this, but the already blossoming opportunities for careers and leisure in Manchester continue to make it an appealing option for those choked by the dismal state of London.
HS2 itself will deliver an extra 400,000 long term jobs all along its route and in surrounding areas. Even before its completion, 22,000 jobs will be created merely by its construction. These opportunities for workers will further supercharge the property market along the route – which, of course, is the key to fantastic property investment opportunities!
Manchester has come of age, and can now proudly boast the title of Capital of the North. It is a city rich in modern cultural vibrance as much as historical heritage; a magnet for the creative, forward-thinking minds of the future. Manchester is a bona fide example of a 21st century city, on course to continue with the exciting growth we’ve seen there in recent years. As such, the Manchester property market is an absolute hotbed of money-making potential.
Another reason to invest in Manchester in particular? By 2050, it is estimated that a staggering half of all households will live in cities. Homes are set to become smaller and smarter, whilst cities – of course – offer the facilities, entertainment and lifestyle options that are simply not available in the suburbs.
So, with all that as an introduction, let’s get stuck into looking deeper about why investing in property in Manchester could be the ideal investment decision.
Regeneration and Investment
There are so many regeneration projects either in progress or on the horizon in central Manchester at present, it’s hard to know where to begin. But we’ll do our best.
Located within a strategically valuable gateway location in south western Manchester city centre, the Cornbrook Hub is situated close to the A56 Bridgewater Way, with good access to Pomona Island (part of the development site), the Bridgewater Canal, and with the Cornbrook Metrolink station central to the site. This Metrolink station is key to the city’s public transport network, and therefore vital to the success of this development area.
Right now, despite its great location, Cornbrook is an underutilised part of the city, occupied by open storage yards and scrap metal merchants. It’s these that are detracting from the massive potential of the area, and making it incompatible with recently regenerated St George’s Island, and new proposals for Pomona Island. In short, there is a huge amount that this area of the city could offer. You can see the full regeneration proposal here.
Nonetheless, all signs point to a strong future for the area, and it’s likely to be a prime location to consider for early investment opportunities. Watch Cornbook closely.
Set within close proximity to the city’s retail hub, near to the Salford city border, the Medieval Quarter is a culturally and historically rich area of the city. Home to both Chetham’s School of Music and Manchester Cathedral, as well as the National Football Museum, new developments within the area are promising.
Not only is the destination itself prime territory, it’s also an ideal route to the main business sector and retail core of the city. Proposed new developments will expand on the green space and tree coverage in the area, and seek to drive the Medieval Quarter’s attractiveness to potential new residents. Find out more about the Medieval Quarter proposals here.
East Manchester, specifically the areas of Ancoats, New Islington, Beswick, Miles Platting, Openshaw, Clayton, Newton Heath and Gorton, has undergone substantial redevelopment in recent years.
It was the part of Manchester most severely affected by the industrial decline of the 1970s, in which over half the area’s manufacturing jobs were lost. House values subsequently plummeted. As a result, the area spent a long time in a state of impoverishment.
Things, however, are now on the up. Huge investment in the creation of family neighbourhoods – involving the construction of over 5,000 new homes, and the improvement of over 6,700 – is now paying off. Three new shopping centres, two new health centres and seven children’s centres have appeared, as well as 1,300 local companies supported by business advisors, and nearly 200,000 square metres of prime commercial floor space has been built.
In the Ancoats area, design-led apartment blocks have been integrated into well thought-out and sustainable neighbourhoods. Though most have been snapped up already, construction is still going on, so it’s worth registering an interest, particularly if the words ‘edgy’ and ‘progressive’ appeal to you.
Similarly, New Islington is worth a mention. Located within Ancoats, Urban Splash (the renowned Manchester property developers) have been behind the creation of this brand new community. They brought in avant garde architect Will Alsop to design the housing stock, which is aimed at families (there’s a lovely, fresh ‘free’ primary school here), both rental and owner-occupier.
As a result, East Manchester is now quickly becoming an area renowned for its business prowess. It shows promise in becoming a significant employment location, with successful companies choosing to locate themselves in the new and thriving area.
90 rental apartments in the Ordsall 11-storey tower block (200 metres from Salford Central station), a mix of cafes, bars and restaurants, outdoor events space and a new public square, form just part of the development.
A further 100 apartments have already been built on the site of the former Vimto factory, and 372 flats within a 15 storey ‘Manhattan-style’ block on Woden Street are in progress. 580 apartments, boutique studios and townhouses are proposed for the £75m Adelphi Wharf scheme. 36 townhouses with rooftop gardens have received planning permission overlooking the river.
All in, over 1,000 new homes, along with hotels, shops, leisure facilities and restaurants are expected in New Bailey. This is estimated to bring 11,000 jobs to the area.
Just as with most aspects of Manchester right now, the city has ambitious plans for the future of its transport networks. There’s a long term vision in place (see video below), but they’re working in five year increments to keep improvements moving constantly into the future.
Greater Manchester’s Transport strategy is focused on devolution of powers and funding from central Government, pushing for greater local determination of policies, funding and delivery. In short, it has big ideas, and wants to be in control of making them happen. That explains why their plans reach forward as far as 2040.
We also investigated the Annual Survey of Hours and Earnings, and found that the median weekly wage for residents of the city of Manchester was £392 in 2015, just shy of the median for the north west as a whole (£401). The median figure for the whole of England in 2015 was £430.
Some more data for you to chew on:
The 2011 census showed Manchester to be the fastest-growing city in the UK, in terms of population
Greater Manchester is home to more multi-millionaires than anywhere outside London, with the highest levels attributed within the City of Manchester itself
Manchester rates 7th in the 2016 mid-year Quality of Life index for Northern Europe, behind Edinburgh (1st), Copenhagen (2nd), Reykjavik (3rd), Helsinki (4th), Stockholm (5th, and Tallinn (6th). London, by comparison, is 12th. It is also ranked 6th in the UK
Manchester is rated second most globally influential city in the UK after London
Research at the University of Manchester is ranked the third most powerful in the UK, behind Cambridge and Oxford
Along with London, Manchester featured in the top 30 cities in the world for investment. Of the top 30, Manchester was 12th for the highest proportion of urban economy derived from financial and business services
We think we’ve made it fairly clear how highly sought-after the City of Manchester is as a residential area. But let’s look a little deeper into what an investment in Manchester property could mean.
The 2011 census tells us that, at that time, 37.8% of households were owner-occupied, and 28.4% were privately rented. Subsequent data suggests that the rental figure has ballooned considerably since 2011, whilst owner-occupancies have decreased. Council and social housing made for 13.5% and 18.1% respectively. Just over 30% resided in terraced properties, though this figure has since decreased.
Data from the Office for National Statistics shows Manchester to have the greatest percentage point increase in proportion of flats sold between Q4 of 1995 to Q2 of 2015. Flats sold in the city have risen from 10.1% in 1995 to 35.6% of all property sales in 2015. This equates to a 25.6% increase.
Looking at the number of properties on the market at present, compared to 2015, we can see that there has been a significant drop-off. There are 27% fewer properties of all types on the market in July 2016 than there were this time last year. Nonetheless, in keeping with the data from the Office for National Statistics, the highest proportion continue to be flats, with 1471 up for sale in July 2016. This equates to 19% fewer than last year.
Of course, where there are fewer properties on the market, demand is high on those that are for sale. From our information, in the period May to July 2016, it seems terraced houses, and one bedroom properties, take the least amount of time to sell. Interestingly, however, when we look at value, it’s the £400,000 to £500,000 bracket that is snatched up quickest.
The Rental Market
When we look at July 2016’s data on the rental market in Manchester, we see that the most popular properties for rent are in the two bedroom category. They fly off the market within an average of 51 days, and there are nearly 2000 on the market at time of writing. Tenant occupancy rates in Manchester are at over 97%.
Why so popular? Well, there are a number of factors at play making rental the primary accommodation option for residents in Manchester. Firstly, the lack of lending for mortgages, and a decline in social housing. Then there is the shifting employment landscape and continuing immigration. Divorce rates are higher than ever, and (completely unrelatedly, of course) people are delaying marriage for longer. Finally, there’s the rise in student numbers.
Demand for high quality, purpose-built student accommodation is higher than ever. Students, it seems, aren’t happy to fester in mould-encrusted digs anymore. We won’t mention anything about millennial entitlement issues here. But the result is that Manchester is providing property that meets the demands of the city’s valuable student population, and with over 80,000 students arriving every year, this is a lucrative market.
What’s more, a large number of students enjoy Manchester so much that they stay on after they’ve graduated, moving up to a house share or city centre apartment as they make the transition from study into the workplace.
In the city centre, in the rental market in particular, the highest demand can be found in those smart, European style open plan apartments and converted warehouses. Even more so, high quality micro-living apartments, and those boasting new techie smart home features. These are the sort of properties young professionals rising up through the economic ranks are after, and the city centre is where they want to make their home.
To Conclude: Should I Invest in Manchester?
Of course, we can’t tell you to invest anywhere. We cannot make assurances, and markets can always drop as much as they can grow. Having said that, however, all signs point to a glittering future for Manchester city centre.
Regeneration is reaching deep into every crevice of Manchester, with billions being invested in the continued growth of this city. Great minds are seeing the sheer potential Manchester has to offer, and for those savvy enough to jump on the right opportunities as they come up, there is a sense of the property market here being ripe for the picking.
Hi guys and welcome to our first property news blog of the month, as usual we will be given you a snap shot of the latest goings-on in the domestic market. This week we look at the Manchester property market and how it is still strong after the Brexit vote to ending our round-up and focusing on landlords setting up companies in order to save tax. Slightly behind with what’s going on in the property world? If so, catch up with our last property news blog update.
Manchester Property Market Still Strong Despite Brexit
New development plans in the city are not overheating despite recent news of apartment developments that have been given the green light.
New schemes approved in the last few days include Salford council’s approval for a 35-storey tower and a 17-storey tower at New Bailey Street developed by Trinity Riverside Holdings and a 68-storey tower at Owen Street proposed by Renaker. The landmark development will provide 1,508 apartments and penthouses in four blocks of 39, 46, 52 and 66 storeys. (MEN, July 2016)
Natwest’s Heath Thomas mentioned in MEN that consumer confidence will affect demand for mortgages, but the fundamentals in the city’s residential market are remain sound because there is a structural shortage of homes across the length and breadth of the country.
Addleshaw Goddard’s, Marnix Elsenaaralso added his views in the MEN saying Manchester has all of the ingredients it needs to take forward housing delivery, however, it will need to fight with the central government to be able to deliver the right housing products that cater for the city specifically.
He stressed that it is important to ensure central government policies don’t kill off this growing sector.
Due to the recent drop in the pound, many Chinese property investors have started to look at the U.K. market for potential bargains.
The number of so-called leads from Chinese home-seekers for U.K. properties recently doubled according to Juwai.com, a real-estate website based in Shanghai that allows Chinese buyers to browse residential and commercial properties around the world. Leads indicate that a buyer was interested enough in a property to contact a real-estate agent or developer. (WSJ,June 2016)
Manchester in particular has seen a wealth of Chinese buyers and investors. For example, a recent development at Salford Quays, called the Dock Office, just half the apartments were sold to locals. A quarter went to Chinese nationals.
They are not just buying and investing they are also involved in the construction process.
The Beijing Engineering Construction Group is investing £800m in Manchester’s Airport City, which will include a hub for other Chinese firms to set up. President Xi Jinping saw the site in person when he visited last year. (BBC, April 2016)
Now that Manchester has direct flights to both Beijing and Hong Kong also makes it even more easy for potential investors to visit the city and seek long-term opportunities.
Rental Prices Increased in June
Rents kept increasing in the three months to June, but there are signs that the growth in the rental market slowed in the first half of 2016 as compared to last year. (City A.M., July 2016)
According to HomeLet, The average renter in the capital now pays £1,575 per month, up 3.9 per cent on last year. For the rest of the country, renters pay an average £773 per month, which is 3.5 per cent higher than last year.
Barbon Insurance Group’s chief executive Martin Totty shared his views in City A.M. stating : The impact of the EU referendum vote will now play out over the months ahead: if as expected, the result acts as a restraint on the supply of new housing, the gap between demand and supply in the private rental sector will remain marked; all the more so if more people decide to rent while waiting to see what happens to house prices.”
How Much Will Your House Be worth in 2030?
The average price of a home in England will be more than £450,000 in 2030, according to research from estate agents eMoov.
Their calculations were based on the 84 per cent increase in house prices during 2000 and 2015 and applied it to the next 15 years.
The map (below) illustrates just how dangerous this current artificial inflation of the market could be in the long run (as eMoov’s Russell Quirk mentions in the Daily Mail), it’s not just London (where typical values of £1.9million could climb to £3.4million in some parts), the issue will spread all over the country.
Landlords Expected To Set Up Companies To Save Tax
Landlords are increasingly expected to exploit a loophole in the law that allows them to avoid the Chancellor George Osborne’s hefty, punitive tax raid on rental properties, according to a leading mortgage expert. (Landlord Today, July 2016)
Foundation Home Loans‘ commercial director Simon Bayleytold the FT that he predicts to see over 75% of mortgaged buy-to-let acquisitions going through a limited liability company (LLC) structure in the next 12 year or so.
In addition, Mr. Bayley believes that many landlords may consider transferring their existing properties to a LLC.
He goes onto mention that if landlords are using income from a current rental they may require help calculating if the capital outlay is affordable for them, even if the long term benefits suggest to explore the LLC route (also mentioned in Landlord Today).
Mortgage Concepts Associates director Mike Richards agrees with Bayley’s insights, his view is that gradually most lenders who are in the sector will offer this (the 75% or more projection) and premium lenders that are charged for limited company mortgages of around 0.5% will ultimately vanish.
Moreover, he reckons that you will still get a percentage of people who will mistrust the limited company route, but in reality, this is really the only way to go for the future of the buy-to-let market in the UK.
What Are Your Thoughts?
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