Property consultant JLL told guests at a residential market briefing this morning that it expects property prices in Manchester to rise 5% in 2015 and 26% over the next four years.
Speaking at JLL's Residential Predictions breakfast seminar at the Bridgewater Hall this morning, Adam Challis, head of residential research at JLL, said the city's prime two-bed flats will leap from £280,000 to £354,000 by 2019.
Rents are also expected to rise, with 9% growth in 2015 and 26.3% overall by 2019, when a two-bed apartment in the city centre would achieve £1,230 a month compared to £975 today.
The consultant links these rises to the weak supply of new homes coming into the market, with only half of the 9,000 new city centre homes needed to meet demand currently in the development pipeline. In addition, JLL says a new surge of demand can be expected with occupiers priced out of the capital entering the local market, putting additional upward pressure on values.
Challis added: "Manchester is unique among the regional cities, with the severely short capacity launching a new market cycle and driving up both capital and rental value. We're also starting to see some of the traditional hallmarks of the London market creeping up north with an increase in the number of international private investors buying property to let.
Stephen Hogg, lead director of residential at JLL in Manchester, adds: "The market in Manchester is indicative of its position as the second city and, along with Birmingham, is seeing flocks of new occupiers who have been priced out of London looking for homes.
"The level of growth we're seeing is sensible, and values still have far to go to meet those of Greater London, but the situation provides investors with an opportunity to capitalise on the shortfall and it's clear that development challenges will soon have to be overcome in order to meet the increased occupier demand."
JLL said the number of residential towers of more than 20 storeys planned for Manchester is around 10 or 11 currently.