What affect is the Northern Powerhouse having on the rental market?
When George Osborne announced the Northern Powerhouse initiative in 2014, Leeds, Liverpool and of course our much-loved Manchester, were given a renewed burst of life. Driven by a desire to redress the north/south divide, the Northern Powerhouse has promised plenty of government spending to help unify us northerners into a force to be reckoned with.
The aim of the initiative ‘is to transform Northern growth, rebalance the country’s economy and establish the north as a global powerhouse.’ In short, we can bid a firm goodbye to the UK’s fixation on the south and welcome to the scene a collaborative northern project enforced via improved communication links and better transport connections. Finally, London has some competition.
So what exactly is the Northern Powerhouse ?
First and foremost the vision has made a firm commitment to improving transport links between the core northern cities. The building of the HS2, a super speedy rail network across the North West and Yorkshire, is scheduled to begin in 2017. Cue the sigh of relief as we bid farewell to infrequent trains, disproportionately long journeys and overcrowded carriages. There are also plans to develop integrated smart ticket systems to support the vision of a single northern economy – say hello our very own Northern oyster cards. More efficient highways, new road links and of course improved connections to Manchester Airport will all help the north cement its position as a global competitor.
Yet we’re not just talking transport improvements. Manchester’s Forward Plan has initiated the development of a “tech-hub” in the heart of the city alongside a £1.2 billion deal to fund three new property projects in Manchester, Leeds and Sheffield. And it doesn’t end there. The Northern Powerhouse project has bagged a whopping £400 million to improve our cities up north, meaning a tonne of new development is on its way!
What’s the end result?
The result of all this investment is simple: growth. The north is in for a prosperous few years and we’ve got the facts and figures to prove it. Forecasts have predicted an economic increase of 2.2% per annum, with our very own Manchester leading the way with a growth estimate of 2.6%. To top it off, around 40,000 new jobs are expected to be created in the region in the next 5 years - could we offer more promising stats?
The impact on the property market
Of course all these changes have had an enormous impact on the UK property market. For far too long the rental market and subsequent investment has been concentrated down south; London has pretty much been hogging the spotlight. On the surface, this has culminated in constant house price growth and a seemingly never ending demand for rented property. All the ingredients for a booming property market…or so it seems.
Yet the reality is that London buyers are constantly priced out and tenants are facing a very real struggle to afford to live. With rising costs and shrinking yields who can blame investors and tenants for looking elsewhere?
And here is where the north can deliver. With the huge investment and development projects that have followed since the unveiling of the Northern Powerhouse, Manchester, Leeds, Liverpool etc. have become increasingly popular places to live and work. With guaranteed high returns, investors are finally recognising the north’s potential as an alternative to London and the property market can already feel the effects. With a forecasted 5.5% increase in house prices in 2016 and the demand for rental property racing ahead of the supply, no wonder the north is so appealing.
And it’s our very own Manchester, crowned as the capital of the north that has remained firmly in the spotlight. With the wave of new investment and a population growth at three times the national average, residential living in the city centre has boomed. Whether you prefer the funky and artistic vibes of the Northern Quarter or the scenic waterside views that Deansgate can offer, Manchester has something for everyone.
Home to two of the UK’s leading universities, our city also proves an attractive choice for aspiring young adults. We already know how fantastic Manchester is but it appears the students do too as it has one of the highest graduate retention rates in the whole of the UK. And who can really blame them – with exciting career opportunities and a buzzing night life – our city is irresistible!
In fact it is these young professionals who are contributing to the booming rental market the most. Changing perceptions mean young affluent professionals are no longer equating home ownership to success and instead prefer the flexibility of renting. With a more mobile workforce who prefer high quality rental property and average yields of 7.98%, it’s no surprise that HSBC identified Manchester as the UK’s buy-to-let hotspot in 2015. And as 2016 is already off to a promising start – it would seem the only way is up!
The future of the residential market
As we storm further ahead into 2016, prospects for the residential market in the North remain bright. The economy is expanding, there is an increasing labour force and the population is on the up. The Northern Powerhouse has acted as a springboard for new investment that has been welcomed enthusiastically. With this wave of fresh productivity and energy, it would seem we have finally shaken off the ‘grim up north’ stereotype and are providing some serious competition to London.