A building boom is happening in the UK’s second city as young workers flee soaring living costs in the capital and others in the region are drawn to its energy and quality of life.
The Northern city has been named the top English location for investors, according to Colliers’ latest report.
The biannual Colliers Top UK Residential Investment Cities has dropped for the first half of 2024. The report pits 20 UK cities against each other, comparing them based on five pillars: economics, R&D, environmental, property, and liveability.
Predicted GDP, housing price growth, population growth, EPC rankings, nearby attractions, and student populations are among the 24 indicators Colliers explores when crafting the ranking.
Manchester was ranked third best by Colliers, beaten only by Edinburgh and Glasgow, which claimed gold and silver, respectively. London came in fourth. The closest Northern competitor to Manchester was Leeds, which was ninth on the list.
Liverpool, Newcastle, Sheffield, and York were also examined by Colliers, but did not make the top 10. Sheffield ranked 12th, Newcastle 13th, York 15th, and Liverpool 16th. Other cities that were examined by Colliers that did not make the top 10 include Birmingham, Brighton, Bristol, Luton, Reading, and Slough.
Oliver Kolodseike, director of economics and research at Colliers, noted that Northern cities had a lot going for them, especially when it came to affordability, housing price growth, and sustainability.
Liverpool, for instance, received a nod in the property section. This portion of the report looked at affordability and house price growth. Liverpool came in third in that category. Newcastle was fourth and Sheffield fifth, with Glasgow and Belfast taking the top two prizes.
York managed to break through the liveability pillar, which examined life satisfaction, broadband speed, and availability of leisure facilities and attractions. It came in fourth in that category, beating Cambridge but behind Reading, Oxford, and Edinburgh.
Leeds and Sheffield both earned spots in the environmental section, coming in fourth and fifth, respectively. This section looked at EPC ratings of residential properties over the past five years, carbon dioxide emissions per capita, woodland coverage, and recycling rates. The two Yorkshire cities were bested in this category by Milton Keynes, Edinburgh, and Cardiff.
Manchester’s triumph is largely due to its economic performance. The report noted its predicted 2.2% annual GDP growth over the next five years – a figure that is well above the average for the 20 cities examined in the report (1.8%).
The city has also seen a housing price growth of 33% during the last five years, compared to the 15% average in the other cities. Add to that a forecasted average unemployment rate of 3.7%, a projected annual population increase of 1.14% over the next 10 years, and an abundance of renters, students, and entrepreneurs.
Those figures helped Manchester increase its ranking from the H2 2023 report, where it ranked fourth.
Colliers’ head of UK residential, Andrew White said “Manchester has gone through a significant transformation including redevelopment in recent years across the housing tenure mix, so it’s only natural that it would rank highly in our analysis. Several large companies have made their way to the city, including JP Morgan, Octopus Energy, and Rolls Royce. This has led for a need for more homes.
Local government has also made an impact in the city, the local authority has also been very active in welcoming developers to make changes in the city through regeneration projects such as NOMA as well as build-to-rent and single-family housing developments in the city’s suburbs, so it’s not surprising at all to see Manchester rank as our highest English city for residential investment.
Furthermore, Manchester’s economic and residential growth highlights the need for strategic expansion to meet housing demand. Angela Rayner’s recent announcement regarding the government’s new housebuilding plans is an important step in this direction to addressing housing shortages. As Manchester continues to attract residential investment and experience population growth, the availability of Grey Belt land for development will support sustainable urban expansion.”
Here is the top 10 residential investment cities in the UK, according to Colliers:
- Edinburgh
- Glasgow
- Manchester
- London
- Oxford
- Milton Keynes
- Belfast
- Cambridge
- Leeds
- Cardiff
When is it best to buy – when prices are rising or falling?
As a general principle, the best time to buy a property is when prices are just starting to rise. The market moves in cycles, so if you can make a purchase at the start of a period of price growth, that should help ensure you build some good equity over the next few years, with less risk of buying and seeing prices fall.
However, to identify this particular time isn’t easy until some months or even a year or so later as when prices rise after a fall, they can ‘yoyo’ for some time to come.
So the actual ‘ideal’ time to buy for you will depend on your own circumstances, particularly if you also have a property to sell or are buying for investment purposes.
- First-time buyer: when prices are just starting to rise
As a first-time buyer, you’re likely to have a relatively high loan-to-value mortgage, so it’s important to try to increase your equity as soon as possible. That will cushion you against negative equity if prices fall in the future and help fund a deposit when you’re ready to move up the ladder. The easiest way to do that is to buy when prices are at the start of a period of growth. - Trading up: when prices are falling
The key here is the fact that you’re buying a more expensive property than the one you’re selling, therefore you’ll save more on your purchase than you might be losing on your sale.
For example, if offers are coming in at around 5% below asking prices, the home you’re selling is on the market for £250,000 and the one you’re buying is £350,000. You may ‘lose’ £12,500 on your sale, but you may well be able to negotiate £17,500 off your purchase, meaning you come out of it £5,000 better off! - Trading down: when prices have been rising well and are nearing their peak
When you’re selling a property – particularly if it’s the most valuable one you’ll ever own – of course you want to maximise the profit from your sale by selling at the top of the market. That said, the reality is that most homeowners who are downsizing have been in their current home for long enough that they have seen the value grow well, and many have also paid off their mortgage. That considerable equity makes it less relevant where the market is in its current cycle, what’s more important is finding the property you want and need in the location you’d ideally like to live. - Buy-to-let investor: when prices are falling
Prices fall when demand is lower than the number of homes for sale, and those who really need to sell may accept a relatively low offer to secure one of the few buyers out there. Buy-to-let investors can therefore often pick up a good deal while the market is falling – particularly those that can complete the transaction quickly – and often end up with a good amount of ‘instant equity’ when prices start to recover.
However, all these are simply general rules and ideal scenarios. In reality, given that we have a shortage of homes in the UK, what’s most important is that you move when it suits you financially and personally, and when you find a property you like. Holding off could mean losing your dream property, and whether the market is rising or falling at the time may not make a huge amount of difference if you are planning to live there for five years or more.
Finally, remember that the averages quoted in the media, and blanket headlines about what’s happening to UK prices overall, may not reflect what’s actually happening in your own local market. The best way to ensure you buy well is to speak to experienced agents in the area, who can advise you properly on local prices and trends.