The price to rent an apartment in Manchester city centre grew faster than anywhere else outside London in the second half of 2022, according to new figures.
Research from property services firm JLL shows that rents in the city recorded an annual growth rate of 22%, compared with 18% in Birmingham, the next biggest.
JLL said the surge in prices was due the end of Help to Buy in October alongside the rise in mortgage rates following September's mini-Budget.
READ MORE: Click here to sign up to the BusinessLive North West newsletter
The firm's 'Big Six' research tracks residential development activity, prices and rents across Manchester, Birmingham, Leeds, Bristol, Edinburgh and Glasgow.
Energy efficiency has emerged as a major driver of rentals in city centres as people look at ways to minimise their bills amid the increased cost of living. Since the start of 2021 20% of EPC certifications completed in Manchester were A or B rated, up from 12% a decade earlier.
Meanwhile, house price growth slowed from 12.6% in June 2021 to 4.9% in the six months to December, the second lowest of the cities analysed. That was mostly attributed to an earlier peak in prices in comparison to other markets.
However, JLL forecasts that sale prices of Manchester city centre homes will increase 19.3% over the next five years, while rents will increase by 21.6%. Both are the highest predicted across the six markets analysed.
The end of Help to Buy, alongside rising mortgage rates, mean a proportion of prospective buyers have delayed their decision to purchase and remained in rented accommodation for longer. This has added further pressure on an already squeezed rental market, resulting in rents rising an average of 15.8% across the Big Six cities analysed.
Stephen Hogg, head of JLL North West and regional residential UK regions, said: "Manchester’s vibrant job market continues to attract the brightest talent, so the competition for housing is fierce. We expect to see rents continue to climb as both new and existing tenants race for space in the city.
"With a strong development pipeline for the city centre and regeneration projects like Victoria North ongoing, continued investment should spur the availability of energy efficient rental properties and help people to deal with rising energy costs while also supporting continuously growing demand."
Marcus Dixon, director of UK residential research at JLL, added: "City centres continue to show a post-pandemic renaissance – this isn’t just a bounce back but an illustration of their underlying strengths in providing education, jobs and comfortable housing for people from all backgrounds.
"As students and professionals increasingly flock back, we anticipate growth will continue. Investors will be hoping a broader economic recovery across the UK will be a boon to city centre property markets."
READ NEXT:
