House prices in Manchester will increase by 26.4% in the next five years with 5.5% growth over the course of 2016, according to property advisor JLL.
The research comes from its new Northern Renaissance report, presented at a Manchester Residential Predictions Seminar in the city centre this morning.
The property advisor predicts that the price of a prime two-bed city centre apartment currently selling for £265,000, could hit £279,000 by the end of the year. In addition, rents are expected to rise by 5% in 2016 and an average of 4.2% each year over the next five years.
Current standard two-bed rents are around £1,050/month rising to £1,495/month for the better flats.
In 2015, sales values rose by 9.5% and rents were up 8.5%, JLL found.
In the rental market, an average of six applications were received per property last year, with many apartments letting in less than 72 hours of being on the market.
With total employment in Manchester forecast to rise by 4.3% in the next five years, the city is predicted to grow by 2,800 new households every year until 2020.
JLL expects Build to Rent or Private Rented Communities developments to become increasingly common in fulfilling the appetite for rental accommodation and investment assets in the city.
Stephen Hogg, head of Manchester residential at JLL, said: “Our predictions highlight the particularly strong returns achievable in Manchester – with rents and capital values set to grow.
“This year we’re going to see the much awaited boom in development of Private Rented Communities. A significant part of the future pipeline in the city is now targeting the PRC sector with significant schemes like Middlewood Locks, St John’s and Muse’s New Victoria bringing forward close to 3,000 units in total.
“This is what a broad section of the market want. High quality rental accommodation that caters to graduates, young professionals and also families are set to do incredibly well in Manchester. There are already three developments of this kind under construction and a potential eight due to start on site this year, including the first large-scale forward funded scheme at New Bailey in Salford.”
The report, also delivered at the property advisor’s residential predictions event for Liverpool, in conjunction with City Residential, and in Leeds, highlights the growth predictions for markets across the region.
Adam Challis, head of UK residential research at JLL, said: “The buoyancy seen in the market last year is set to continue into 2016 and over the next five years in the North. With Manchester’s strong position it’s certainly the shining star and is benefitting from continued investment and a strong business community which is driving significant demand, particularly for Private Rented Communities.”