The latest report from Hometrack UK shows that Manchester had the strongest housing market in August across the U.K.’s major cities. The city registered annual house price growth of 7.3% year-on-year to the end of August which continues a trend which began back in 2014. Investors seem to be switching away from the London market, which showed annual growth of just 1.9%, with cities such as Manchester now appearing more strongly on the radar.
While Manchester came first with house price growth of 7.3% it was closely followed by Birmingham at 6.7%, Edinburgh at 6.6%, Leicester at 6.4% and Nottingham at 6.2%. The weakest growth amongst the top 20 cities in the UK was experienced in London at just 1.9% (down from 10% annual growth in August 2016) and Aberdeen with a similar figure. The market also seems to be cooling in areas which had previously enjoyed strong growth such as Cambridge down to 2.8% and Oxford, a little better at 3.8%. Whether we are seeing a switch away from the south of England to the Midlands and North is debatable but there does seem to be a change in investor sentiment and strategy of late.
Why is Manchester so strong?
Perhaps the one development in the Manchester property market which caught the eye over the last few years was the move, lock stock and barrel, of the BBC to Salford – which is just outside Manchester city centre. This perfectly epitomises the growth in not only Manchester’s stature in the business community but also the local economy. A report by the Centre for Economics and Business Research confirmed this growth showing that the Manchester economy has grown by 7.5% since 2014 compared to growth of just 6.9% for inner London. When you bear in mind that inner London has been the benchmark for the UK economy for decades, this is significant.
A report by Savills also adds more meat to the bone with confirmation that the take-up of office space in Manchester during the first half of 2017 was up 20% year-on-year compared to the same period last year. For many years now there has been talk of creating a “northern powerhouse” much of which was hot air and bluster but it now seems to be coming to the fore. The appointment of an active and strong-willed mayor of Manchester, in the shape of Andy Burnham, has certainly helped to attract more business and funding to the region.
Is London being left behind?
In many ways the financial markets, which dominate the London economy and property market, have been the region’s strongest selling point in years gone by. However, as Brexit tasks continue to flounder in some ways the financial markets have become the achilles’ heel of London. Without unrestricted access to the European financial markets there are growing concerns that London will suffer as some financial business may be relocated to within the European Union.
The UK government is attempting to negotiate a special deal for London, bearing in mind its position in the worldwide financial markets, but at the moment this is proving to be challenging. It will be interesting to see whether investors flock back to London once the Brexit issue has been resolved, either way, or whether investors are now looking towards the likes of Manchester and its growing reputation as a powerhouse of the North.