Renting in Manchester
As one of the largest and most vibrant cities in the United Kingdom, it is no surprise that many people are keen to live and work in Manchester. This is a city with a strong reputation but it is also recognised as a modern city with a lot to offer. With increased demand, it is therefore no surprise to learn that renting in Manchester is becoming more expensive.
When you examine the rising rental prices in Manchester, the reasons are based on very basic economic principles:
- There is not enough property being supplied to the rental market
- There is too high a level of demand for rental property
When demand outstrips supply, as it is in Manchester, the cost of renting in Manchester will rise. While this is a situation that is playing out in many areas across the country, there are a few specific reasons why Manchester is struggling to maintain rental prices.
The student population
At the beginning of the 2015/16 academic year, the Manchester Evening News reported that over 100,000 students were descending on to Manchester for the new term. Manchester is not just an educational hub in the North West of England; Manchester is seen as an attractive location for students from all around the world.
The breakdown for the top further education institutions in Manchester are:
- University of Manchester – 40,000 students
- Manchester Metropolitan University – 34,900 students
- University of Salford – 18,500 students
The start of the 2015/16 educational year also saw a lifting of the cap on student admissions, so these figures could be set to rise this year and in the years ahead. Student accommodation is obviously more centred on the rental market and with so many more students coming into the area; the demand for rental options is far outstripping supply. This leads to rental fees rising in an attempt to balance out the market.
In May of 2016, EY released figures which show that Manchester is the most successful UK city, after London, when it comes to Foreign Direct Investment (FDI) projects. In 2015, there were a total of 98 FDI projects, which was the largest number that the UK had recorded in over 10 years, and 54 of these projects were based in Manchester. With Manchester Airport being the busiest UK airport outside of the main London hubs and genuine steps being made to recognise Manchester as a Northern Powerhouse, there has been an increased level of foreign investment into the UK property market. With this in mind, there is likely to be an immediate rise in demand for rental options from people coming to the UK with their business. This by itself would impact on the rental market but as there is also likely to be an increased demand to buy property from a number of foreign investors, there is a double impact on the Manchester rental market.
The rise in demand for buying property can be seen in a number of ways. Whether this is through individuals looking to buy a home close to where they are now located, businesses buying property to house leading professionals or foreign investors looking to capitalise on a growing and developing market, there has been a significant rise in the level of demand for Manchester property from buyers based outside of Manchester. With this demand coming on top of a high level of demand for property in the city and surrounding areas, it is easy to see why demand is far outstripping supply in Manchester.This leads to property prices rising, which in turn sees more people and families being unable to afford to buy a home, which increase the level of demand for rental property.
The changing nature of tenants
One factor impacting renting in Manchester is the changing nature of the typical tenants in the city. The average size of your standard Manchester household is falling but with the overall population in the area increasing, this is having a notable impact. It means that there are more sets of people looking for property. A very basic example can be seen that twenty years ago, a family of 6 (2 parents, a grandparent and 3 children) would be looking for a single home. In contrast, the nature of the average household would perhaps see this family breaking down, into three separate groups. The elderly parent would be looking for a property by themselves, one parent would have three children and the other parent would be looking for a property by themselves, with space to allow the children to visit. In the first example, 6 people could find the accommodation they need in one home. In the second example, it requires three separate properties to meet the needs of the same six people. This is a very simplified example but given the average makeup of families in the United Kingdom today, this scenario is being played out time and time again. This adds to the increased level of demand for property in the UK and Manchester is one of the cities that are struggling to keep up.
With property developers unable to keep up with the rise in demand for rental property, or being unwilling to create affordable rental options, the imbalance between supply and demand in the Manchester rental market means that rental fees are likely to increase. This means that property investors should find that Manchester is an attractive investment opportunity for many years to come.
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