Property investors scanning the UK for the top 2023 location may find the most lucrative opportunities in the north west city of Manchester.
Manchester as a key property investment location is not a new phenomenon. Many parts of the city have transformed beyond recognition over the past couple of decades, meaning the housing market there has been firmly on the radar for investors for a long time.
House prices in Manchester have soared by 330% over the past 20 years – a higher percentage rise than anywhere else in the UK over that time period. However, the city’s property market potential has far from ‘peaked’, with new developments and regeneration projects continually popping up.
A study conducted by money.co.uk has pinpointed the best locations in the UK to invest in property in 2023. While the top five list is dominated by towns in the north-west – with Blackpool leading the way – the first city on the list is Manchester.
Strong yields in Manchester
Manchester is the first city in money.co.uk’s rankings, coming in sixth position overall as the most investable location for the year ahead.
The findings show that the average house price there is currently £234,841, while the average rental price is £850 per month. This means rent is 0.362% of the average price of property in the city.
This compares with Blackpool in the top spot, where the average home is valued at just £140,108 – significantly below the national average – while average rents are £550 per month. This makes rent as a percentage of property price 0.393%.
When looking at the capital growth seen in Manchester over the past 10 years, the study also reveals that house prices have increased by 89.59%, from £123,867 in 2012 to £234,841 in 2022. Yet many forecasts show that such growth is far from over in the city.
Regeneration providing £10bn boost
As previously mentioned, regeneration in and around the city of Manchester has changed the face of the city and its housing market. Yet these transformational projects are ongoing, and are being spurred on by a growing number of major companies ‘northshoring’ away from the capital and the south.
According to research by Stripe Property Group earlier this year, the significant regeneration taking place in Greater Manchester Combined Authority is expected to add around £10.2bn to the value of its property market.
This is based on the fact that, according to CBRE figures, local redevelopment schemes boost nearby property prices by an average of 3.6%.
By regenerating an area – which could include enhancing its public realm, improving connectivity and increasing the number of local amenities – it can be transformed into somewhere that greater numbers of people want to live. As a result, more investors want to buy, more tenants want to move, and more businesses want to be located there.
From a property investment perspective, this is likely to increase monthly rental yields, while also seeing the value of your investment go up for when it comes time to sell. Looking at areas that are earmarked for regeneration is therefore an effective way of selecting a property opportunity.
Areas close to major universities, particularly well-regarded ones including the University of Manchester, are also known to see stronger house price performance and higher levels of desirability among tenants. One study by Stripe Property Group revealed annual returns could be £6,000 higher for properties near universities.
Many landlords who prefer not to rent to students can still benefit from targeting graduates and young professionals, who often want to live in city centres close to work, amenities and transport links.