£13.8bn – The Value of The North Manchester Property Market

“How Much Would it Cost To Buy All The Houses and Flats in North Manchester?”

This fascinating question was posed by the 11-year-old son of one of my landlords when they both popped into my offices. At the time I didn’t have an answer for him, instead throwing my hands in the air I smiled and vaguely answered “hundreds of millions”. I hadn’t ever thought about the total value of the market, so I thought to myself that it would be interesting to sit down and calculate what the total value of all the properties in North Manchester are worth.

Now this isn’t something that you can just google lightly and ping receive an answer, you can readily find information on house prices and trends, you can find population data on a city wide basis and lots of vague demographics dotted around, but nothing readily prepackaged to tell you 1) how many houses are in an area and 2) what the values of those houses are. It took me considerably more work than I first anticipated and became a bit of a mission for me to solve this problem.

I started with the city council, then went to the office for national statistics, then pulled census data and land registry files. I quickly found myself with reams upon reams of data which all gave lots of clues, but no definitive answer.

When I delved into the numbers, the first thing I found was that the average price currently being paid for a North Manchester property stands at £99,229.  Which seemed a little low, so I split the property market down into individual property types in North Manchester; the average numbers come out like this.

 

Curious as to how the figure settled at £99,229 I then looked at the distribution of the types of homes in North Manchester, and found this:

 

Working out of Moston, and area heavily packed with street upon street of terraced houses, I wasn’t too surprised to see terraced houses dominating the statistics for North Manchester. However, what was initially surprising was the figure for the number of flats.

I initially wrote this figure off as being inflated by bedsits, converted homes, flats above shops and some of the larger mixed use commercial buildings. However, I chose to dig a little deeper into the distribution of the types of flats in North Manchester and this is what I found:

 

Although, from working in the North Manchester property market for the best part of my life, I did appreciate there were a fair number of flats, I hadn’t until now got my head around the fact that there were just shy of 28,000 flat in the area, of which over 24,500 were within custom built blocks or tenements.

 

A cool £2.1bn could bag you ALL of the flats in North Manchester. Sitting at the lowest price point the local flats are offering astounding returns on investment as rental properties and are in very high demand with the young professional market.

If you happen to be a multi billionaire, check down the back of your sofa, in that pair of jeans that you don’t wear but are hanging onto incase they fit again or in an old coat pocket- if you happen to find a spare £2.1bn give us a call and we’ll talk about investments.

If you’re not a multi billionaire, and like me you’re just a regular person trying to save for the future and provide security for your family this information may seem pie in the sky, but I promise there is a point to it all.

What does this all mean for North Manchester Investors?  

Well as we enter the unchartered waters of 2017 and beyond, even though property values are already declining in certain parts of the London property market, the outlook in North Manchester remains relatively good as over the last five years, the local property market was a lot more sensible than central London’s.

North Manchester house values will remain resilient for several reasons.  Firstly, demand for rental property remains strong with continued immigration and population growth.  Secondly, with 0.25 per cent interest rates, borrowing has never been so cheap and finally the simple lack of new house building in North Manchester not keeping up with current demand, let alone eating into years and years of under investment – means only one thing – yes it might be a bit of a bumpy ride over the next 12 to 24 months but, in the medium term, property ownership and property investment in North Manchester has always, and will always, ride out the storm.

 

What does the Budget Mean For Us?

What does the Budget Mean For Us?

Earlier this week we met as a team and were notably hawkish about what may come to light this week in the the budget. The chancellor told us what we all already knew, the future is indeed uncertain. In this, the so-called “budget for the next generation” we have a number of key takeaways and thoughts.

Keeping politics and personal opinions out of the blog, we have included below just the facts as we see them, and the major factors that will cause an impact to the people we work with on a day to day basis. We are happy to discuss any of the key points here and how they will affect you. Either call us on 0161 681 3724, or leave a note in the comments section at the end of the blog and we’ll respond and open up the debate.

 

Landlords and second homeowners

Stamp Duty

A 3% Stamp Duty surcharge on second homes and Buy to Let properties from 01 April 2016 will be introduced and larger investors will not be exempt as previously thought from the stamp duty charges, meaning all purchasers of Buy to Let properties will pay the additional tax. This was expected not to be of concern to people owning 15 or more houses however this isn’t the case it applies to everyone.

 

21st March – Mortgage Credit Directive

From 21st March consumer buy-to-let mortgages (on rented properties that are not being used as part of a business) will be regulated by the Financial Conduct Authority (FCA). Second charge mortgages (also known as secured loans) will also come under regulation. This could mean that financing deals become a little harder

 

Taxation

Capital Gains Tax (CGT) will be cut from 28% to 20% for higher rate taxpayers and from 18% to 10% for basic rate taxpayers. Residential property sales and carried interest will be exempt from Capital Gains Tax (CGT) being introduced on 06 April 2016.

There will be an 8% surcharge to landlords selling a buy to let property meaning this benefit is not being passed onto landlords. We consider the reason behind this that because of recent tax changes in stamp duty and also the clause 24 meaning less tax relief on mortgages of BTL property’s (unless held in a ltd Company) many landlords are already considering selling if they were to benefit from the CGT reduction this would encourage more meaning an increased amount of property to the market that may create a crash in prices.

 

Rents

We consider all the recent changes in tax and legislation on current landlords will increase the rents. There will be more landlords moving out of the market along with no large increase in building will increase demand. As LHA rates are frozen for the next 4 years this will mean either attracting working tenants or expecting LHA tenants to top up their rents.

 

THE NOTHERN POWER HOUSE

We all have our own views on the current effectiveness of the Northern Powerhouse, or lack thereof, but the budget statement did have some promising news for our region, my key takeaways were:

Homelessness

A major issue for Manchester – and one the government has been under pressure to address.In response the Chancellor strayed out of his usual territory to set up a £115m fund to help tackle rough sleeping. Most of that will be used to provide ‘low cost’ accommodation for people leaving hostels before they get into regular housing, creating 2,000 new beds.

It is also delaying a planned cap to local housing allowance by a year – and getting immigration officials to work more closely with local authorities to send back EU migrants who end up sleeping rough, a significant problem in Manchester.

The city has seen rough sleeping rise tenfold since 2010 and there is no sign of that rise slowing.

It is so far unclear how that money will be allocated – whether it will be done according to population size or the current rough sleeping figures.

Nevertheless the big structural problems that underpin our rising homelessness still remain: cuts to benefits and a chronic housing shortage but this is only expected to get worse by the unfair taxing of landlords

Buisness Rates

Greater Manchester has been handed control of all its business rates in replacement of its main central government grant.

Along with Liverpool and London, the area will move towards a model where it is far more reliant on the taxes it raises from local firms going forward.

At first sight the figures for 2016 would suggest Greater Manchester as a whole will be £80m better off as a result.

However there are all sorts of unknowns – including what happens if a huge economic downturn hits the region, such as when the steel industry collapsed in the north east.

There are currently revaluations taking place across the country, due to come in in 2017, that will be used to reset the amount paid by businesses in rates – so that could dramatically alter the amount of income available to councils.

Within Greater Manchester there is the issue of how the money will be redistributed, given that as it stands areas such as Rochdale and Oldham would lose out significantly compared to those such as Manchester and Trafford, which would gain enormously.

But perhaps the biggest danger is also contained within the Budget: thousands of small businesses – 90,000 across the north west – being taken out of business rates altogether.

That looks dangerously close to making a very generous tax cut – and making town halls pay the price.

Transport

High Speed III train between Manchester and Leeds has been given the green light. This will only help as increased infrastructure and improved transport can only help house pricesProbably the most significant part is £161m for the Highways Agency to speed up improvements to the M62 on both sides of Manchester , but money was also committed towards bringing town train journeys between the two cities to half an hour.

He also found £4m towards the eventual transformation of Manchester Piccadilly – and other northern stations – ahead of HS2’s arrival in more than a decade’s time.

CRIMINAL JUSTICE

Greater Manchester is to become the first English region to get new powers over the criminal justice system.

Chancellor George Osborne used the Budget to announce further devolution of powers to the area.

The change means decisions on offender management, education in prisons and work with youth offenders will be made locally.

The region’s Labour mayor, Tony Lloyd, said “we will have to read the fine print” to make sure there is “no loss”.

The Chancellor also announced the region will get a new prison and will keep 100% of business rates, beginning next year. Greater Manchester Combined Authority, which comprises the region’s 10 councils, said it will have more control of funding to support both offenders and victims of crime.

It is proposing devolving other budgets, including for female offenders, young offenders and those sentenced to fewer than two years in prison, which would mark a major change to the current system.

Announcing the change, Mr Osborne said: “This is the kind of progressive social policy that this government is proud to pioneer”

 

English home ownership rises for first time in a decade – but so does the number of private renters who believe they’ll never be able to buy


English home ownership rises for first time in a decade – but so does the number of private renters who believe they’ll never be able to buy


The number of households that own their own home has risen slightly, halting a decline that has lasted for a whole decade, official new figures reveal.

Of an estimated 22.5million households in England, 63.6 per cent are owner-occupied, 5,000 more than owned their home a year ago, the latest annual English Housing Survey from the Department for Communities and Local Government shows.

At the same time the number renting privately fell – albeit slightly for the first time in 17 years.

But despite the increase in home ownership, there has been a considerable drop in the number of private renters who believe they will be able to step on to the housing ladder at any point in the future, the figures show.

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What’s more, those who do buy are older than in the past, and are finding even larger deposits.

In 2014/15, of the number who currently rent from landlords, 57 per cent believe they will be able to buy a property at some point.

This is a decline from 61 per cent the previous year and comes as house prices continue to rise. The data shows a typical deposit of £42,505 is now needed to buy a home.

Of those who do believe they will be able to buy, 43 per cent think it will take them at least five years or more to achieve it.

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Lucian Cook, head of Savills UK residential research, said: ‘The short term trends shown in the latest English Housing Survey need to be treated with caution, given the reported fall in private renting in 2014-15 follows a particularly large increase in the preceding year.
‘Nonetheless it is a good indicator of longer term trends, such as the widening generational divide of the housing market.
‘Behind the short term volatility, levels of private renting among under 35s are still up by over 1million in the past decade.
‘Yet in contrast, the number of owner occupiers over the age of 65 who own their own home outright rose by over 900,000.’

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The English Housing Survey also goes into detail about the size of homes, energy efficiency and even takes a look at how many people live with mould problems in their home.

According to the data, the average usable floor area of dwellings in 2014 was 94m2. Social sector homes are the smallest, typically 67m2, while privately rented homes are on average 77m2.

This compares to 106m2 for owner-occupied homes.

Only 11 per cent of dwellings in the social rented sector had a usable floor area of 90m2 or over, in contrast with 22 per cent of homes in the private rented sector and 52 per cent of owner-occupied homes.

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The problem of mould has fallen in recent years. In 2014, about a million homes – or four per cent – had issues with damp, compared with 2.6million – or 13 per cent – of homes in 1996.

The energy efficiency of the English housing stock has continued to improve. In 2014/15, the average energy efficient rating was up to 61 points, from 45 points in 1996.

The proportion of dwellings in the highest energy efficiency rating bands A to C has increased considerably between 2004 and 2014, from four per cent to 26 per cent, thanks largely to improved insulation.

At the same time, the proportion of dwellings in the lowest F and G bands fell from 20 per cent to six per cent between 2004 and 2014. Three quarters of homes are in categories C to D.

Map shows Manchester ‘property boom’

Student and property enthusiast Ed Howe has created an interactive online map showing all projects currently under construction or proposed in and around Manchester city centre, to demonstrate the clusters of development activity.

Howe is studying for a master’s degree in city planning at Newcastle University and is originally from Salford.

The colour-coded map indicates the locations of proposed buildings, as well as those projects that have been granted planning permission or are under construction. The map also includes transport schemes and masterplan areas.

Click here to view Howe’s Manchester Development Map

Howe said: “I think Manchester is pretty special at the moment, as a city we’re starting to attract a lot of investment and cranes are beginning to bounce up onto the skyline once again, constructing skyline-altering schemes.

“It can be quite difficult to imagine, or remember, all these different developments and I think my map makes Manchester’s regeneration and property boom accessible to the people who actually live here. They can just go on the map, click one of the pointers and find out what’s happening there. My map also shows how Manchester’s built urban core (city centre) will expand in the coming years. We’ve a lot of development frameworks and masterplans around the edge of the city centre, which is currently derelict or underused land unwelcoming to most people. Hopefully, with some thought into quality of design, these developments will push the urban core out enough to start benefitting the traditionally quite detached inner city areas.

“Clearly most of it is taking place in the city centre, but it’s clear to see clusters forming around St Peter’s Square and Victoria/Piccadilly. Transport nodes are seemingly ‘where it’s at’ in terms of property development, and this can only be a good thing in terms of the city’s overall sustainability. Other clusters have formed around Salford Quays and, interestingly, Ordsall, which I believe will become very active in the next 10 years due to it being sandwiched in between the city centre, Salford Quays and the development areas at Middlewood Locks/Central Salford and Pomona. If there’s anywhere to buy property in the city at the moment, I would put my money on Ordsall.

“Some people will be astonished at the number of apartments currently being built or proposed across the city. There are currently just over 4,000 apartments under construction across the city centre, Salford, Hulme and Trafford, nearly 2,000 of those are in the city centre and quite a few of them are conversions of the upper floors of older buildings. All the scaffolding you have to walk under around Deansgate/King St area is mainly because they’re working on the upper floors. Other than that it’s large-scale developments like the one at Cambridge Street by Renaker, which is providing 282 new apartments, or Two Greengate in Salford, also by Renaker, providing nearly 500 apartments altogether.

“If we were to count up all the apartments which are either under construction or holding a planning application within a 2.5-mile radius of the Town Hall, so taking in the city centre, Salford Quays, New Islington, Hulme, that number comes to 16,731 new apartments. If we roughly multiply that by number of bedrooms, it’s a population explosion of about 40,000 people into the urban core. That’s going to provide new shops, restaurants and public services which will, in turn, provide thousands more jobs for people in the inner areas. I’m a strong believer that residential projects in the centre of cities are catalytic in terms of regeneration and Manchester is a case study for that.

“There’s also over 1m square feet of office space under construction in the city centre and central Salford at the minute. Again, this will provide lots more jobs although we’re still building far too little office space which is why businesses in central Manchester now pay the highest rents of any other northern city.”

– See more at: http://www.placenorthwest.co.uk/news/map-shows-manchester-property-boom/#sthash.0TvQReVN.dpuf

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