Manchester’s property prices keep moving on up

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Manchester does not normally have trouble keeping hold of its student population. After university, 51 per cent of graduates stay in the city, a retention rate that is second in the UK only to London, according to the think-tank Centre for Cities.

But during the pandemic, the relationship between students and the university has soured. Last year, University of Manchester students pulled down fences that had been installed around their residential halls to enforce lockdown measures. Last month, they passed a vote of no confidence in the university vice-chancellor’s handling of the crisis.

Other disputes have centred around rent. The university was forced to reduce rent temporarily by 30 per cent after students protested that they were not being supported during the pandemic.

It is too early to tell whether these experiences will affect Manchester’s graduate retention rate. But the residential rental market, propped up by the city’s young professionals and graduates, is faring better than some of the UK’s other major cities.

In February, the average asking rent in the city centre was £773 a month, down 1 per cent year-on-year, according to Zoopla. While a change for Manchester — rents have grown rapidly there in the past decade — that is small compared with London, where the average rent has dropped 9.8 per cent over the same period. In Birmingham and Edinburgh, the average rent fell 3.4 and 3.1 per cent respectively.

In the past two decades, shiny high-rises and cranes have peppered Manchester’s skyline, as developers have jumped on the chance to accommodate the city’s swelling population. (Between 2006 and 2016, the population in Manchester local authority, covering central Manchester, grew by 16.7 per cent, double the UK growth rate over the same period.)

Yet as the new-builds have gone up, so have sale prices. In the past five years, the average price of a home in Manchester has risen by 35 per cent, according to Land Registry data collated by Hamptons, compared with a 22 per cent increase across England and Wales and 27 per cent increase in Leeds. In the last quarter of 2020, the average price of a home was £196,480, a 5.7 per cent increase from the same period a year previously, and a 10 per cent rise from the end of 2018.

This recent uptick in prices has surprised some experts, who had cautioned that record-breaking years of development between 2016 and 2018 could flood the market. Despite 35 schemes completing during 2020, according to Deloitte’s 2021 Manchester Crane Survey, bringing 5,000 new homes to market during a pandemic — the highest number in a single year since Deloitte’s records began in 2002 — prices have not dropped. The development of expensive, luxury homes has helped to keep prices high.

“There was some concern two to three years ago but actually the absorption of that stock was very good,” says Nick Pleydell-Bouverie, Knight Frank’s head of residential capital markets. The Countrywide group of estate agents reports that they agreed 77 per cent more property deals in January than they did in January 2020. The number of sales in February was 53 per cent up on the same month last year.

There has not been the same “escape to the country” or suburbs that occurred in other densely populated cities such as London, says Jamie Adam, head of Savills’ north England residential development sales. “We saw people moving from a one-bed to a two-bed with a balcony . . . but did we see lots of people saying they were going to move out of the city centre? The answer is no.”

Agents attribute the resilience of demand to Manchester’s population, which is younger than the UK average. In 2016, the average age in the city was 33. About a quarter of the population are between 20 and 29, according to the latest official estimates.

As well as graduates, Manchester’s relative affordability and lively culture have long appealed to young workers for whom London and the south-east have become unaffordable. Ben Burchell, 35, who works in manufacturing, considered buying near his parents in West Sussex or neighbouring Surrey but has set his sights on Manchester, where he worked in the past.

“My money will go further in Manchester,” Burchell says. “When I was living up there I could afford to rent my own place, go on holiday and go out. If I tried to do that down here, I’d have to sign up for extra hours.”

Much of Manchester development has spread in doughnut shape around the city centre. On the ring’s southern edge, and reaching up to 201m, the tallest residential towers are in Deansgate. More are under construction but the pace has slowed. In 2020, 16 residential schemes began construction, says Deloitte, compared with 23, 20 and 22 new starts in 2018, 2017 and 2016 respectively.

The Northern Quarter, a hip district with street art and low-rise industrial buildings, had previously resisted glass and steel. But this year, councillors who had been fighting the approval of a 17-storey glass development admitted defeat. The site has been granted a 250-year lease.

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