Just as opinions on Brexit are divided, so is the impact of Brexit and how it’s being felt differently in different parts of the country and in different industry sectors. This can be seen very clearly in the fact that the London property market is very much in the doldrums (although Brexit is not the only reason for its slowdown), whereas the Manchester property market is continuing to make steady progress. The team at Denton estate agents Indlu look at the impact of Brexit on Manchester’s property market and what the future may hold.
The 21st-century north/south divide
Up until relatively recently, when the London property market sneezed, other property markets caught a cold, flu or even pneumonia depending on their distance from the capital. Now, however, it is the London property market which is frozen into inertia by a combination of high prices and low confidence, to which, somewhat ironically, may have added a sudden increase in supply due to an extensive programme of new-building (to address a clear shortage) together with investment properties coming onto the market as a result of buy-to-let property investors having had enough of increased taxation and burdensome regulation (especially the much-loathed Right to Rent scheme).
For the sake of clarity, the London property market has not, suddenly, become awash with quality properties, there is still a shortage, but at the moment in time, there are far fewer enthusiastic buyers looking for new homes and part of the reason for this is that increasing numbers of Londoners (especially young adults) are making the trip up north in search of a better lifestyle, including more affordable housing and Brexit-proof job opportunities. Although this population growth has been increasing demand for housing and helping to push up prices, property inflation has been kept in check by an extensive programme of sensitive new building, which has been undertaken specifically to ensure that Manchester remains an affordable place to live and therefore an attractive one.
Manchester’s longer-term future
Those who were astute enough (or lucky enough) to buy into Manchester when it was still very much underdeveloped will have enjoyed massive capital appreciation (17% since 2016 including almost 6% in 2018). Capital appreciation, however, can only be realized when a property is sold (although it can help when remortgaging) and can easily be eaten away by the transaction costs (and taxation) involved in “flipping” properties regularly, which is why most property investors utilize a “buy-and-hold” strategy, which focuses mainly on achieving good yields.
This is why experienced property investors are likely to be very happy to see that Manchester’s property market appears to be maturing into one where house-price inflation is of the “slow-but-steady” variety which is much more sustainable and still very attractive when compared to the Thames Valley area, especially London. Similar comments apply to employment growth in the area, although here it should be noted that Manchester still has plenty of room to transition more traditional (and generally lower-paid jobs) into more modern roles (which typically attract higher salaries). The local authorities have been making a clear statement of intent in this regard, by investing heavily in local infrastructure, especially digital infrastructure, which augurs well for the city’s future.
For more information on the Manchester property market or for a free online house price estimate, please contact Indlu.