Are you really better off investing in Manchester property over London?
It seems a universal truism that Londoners will complain about house prices in the capital, and grumble about not having invested twenty years ago (even when they’re barely mid-twenties themselves).
It is true that the housing market is London would have been a brilliant investment in the year 2000: prices have risen by more than 239 per cent since then, versus a national average growth rate of 207 per cent.
But a new report from Colliers has ranked Manchester – where house prices have risen by a whopping 481 per cent since 2000 – as the best place in England for residential investment.
The report, which evaluates UK cities against 24 indicators such as GDP, population growth and leisure facilities, highlights Manchester’s recent economic surge and attractive property market conditions.
In the last five years, house prices in Manchester have grown by just under 30 per cent, according to the UK House Price Index. In London, prices have grown by 10 per cent.
Admittedly, the value of a house in London still dwarfs the UK’s second city: the average house in London cost £523,000 in July 2024 versus £234,000 in Manchester.
But if you’re looking for a high return on your investment, it won’t get much better than Manchester.
Why Manchester?
Manchester’s impressive start-up culture, high levels of reinvestment and expanding population have been slowly pulling business from London, creating a self-reinforcing cycle.
Recent years have seen big names like Rolls Royce and JP Morgan move into the city, as well as the BBC.
The city maintains a “rich talent pool for recruitment and development,” Rupert Aslett, co-founder of property investment consultancy Rothmore, said.
“For property investors, this translates to strong tenant demand and lower price barriers for buy-to-let investments compared to the capital,” Aslett said.
Andrew White, Head of UK Residential & International Properties Asia at Colliers, described Manchester’s place as the number one city to invest in England as “not surprising”.
“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,” White said.
The local authority has been “very active” in welcoming developers to make changes in the city, he added.
A stable city
Part of the reason Manchester is a great place to invest is its reputation – and track record – of stability.
A long-term labour government has been able to use the national government’s devolution measures to enact long-term plans for growth: Labour has controlled a majority of seats in every election since the council was reconstituted in 1974.
From 2010 to 2020, the economy grew faster than the national average: by 39 per cent, from £53.89bn to £74.85bn.
Regeneration projects currently include a 20-acre neighbourhood of homes, offices and shops – NOMA – as well as build-to-rent and single-family housing in the suburbs.
Further development projects include the Bee network, a new London-inspired transport system, and Atom Valley, a public-private partnership with plans to create an advanced manufacturing hub and to generate 20,000 jobs across three sites in Bury, Rochdale and Oldham.
Since 2018, 27 towers have been built in Manchester and there are around 20 more towers under construction, with proposals for around 50 in the planning system. Land in Manchester has already been earmarked for the tallest skyscraper in the country, too.
Looking ahead
If Manchester wants to keep up this momentum and retain its top spot for property investment, it must “ensure the availability of land for development, to meet the residential and commercial demand and keep up Manchester’s momentum,” Trevor Kearney, founder of The Private Office: Real Estate, said.
Andrew White agreed: “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 house building plans is an important step in this direction to addressing housing shortages,” he added, with a particular nod to the importance of greybelt land.
Rayner pledged to build 370,000 homes a year in a statement to the House of Commons last week.
However, Manchester seems to be set to meet housing demand fairly well on its own: joint development plan Places for Everyone – officially adopted between the city’s nine boroughs in March this year – has targets even higher than the government’s.
Historically, lack of investment has been the main barrier to Manchester’s growth, with the national government’s devolution policy (somewhat) helping with this problem.
Now, though, it seems primed for take off (and yes: maybe an even better place to invest than London).