Manchester has now overtaken London as the most sought-after city for buy-to-let investment, in a sign that landlords are increasingly favouring regional markets that offer stronger yields, lower entry costs and better long-term growth prospects than the capital.
23% of investors are targeting Manchester compared with 18% for London, according to data from property buying specialist firm The Property Buying Company.
Average rents in the city have risen by 3% over the past year to £1,349 per month. That is slightly below the UK average increase of 3.4%, but it offers gross rental yields of 6.6%, compared with 5.1% in London.
Values moving in different directions
Property values are also moving in different directions. According to ONS data, house prices in London fell by 2.1% over the past year, while prices in the North West increased by 0.8%.
Overall, the North West is now the most popular region for BTL investment, with 18% identifying it as their preferred location.
Liverpool ranked third among investors at 8%, followed by Birmingham at 7%, with Luton and Nottingham sharing fifth place at 3%.
Stronger returns
The results suggest investors are increasingly willing to look beyond traditional southern hotspots in search of stronger returns. Although Liverpool and Birmingham offer attractive gross yields of 7.7% and 6.4% respectively, Manchester continues to command the greatest level of interest.
Karl McArdle, Co-Founder of The Property Buying Company, says: “Despite not promising the highest rental yield, Manchester has established itself as one of the UK’s most attractive investment opportunities.
“Our data shows that demand for property in Manchester is nearly three times higher than in Liverpool and more than three times higher than in Birmingham, despite the latter two offering more enticing rental yields of 7.7% and 6.4%, respectively.
Manchester ticks a lot of boxes for investors
“The city ticks a lot of boxes for investors, with a growing population, high rental demand, ongoing regeneration projects, several universities and major employers all helping to attract students and young professionals.
“Manchester has evolved from being an alternative to London into a destination investors actively prioritise. The gap we’re seeing in demand suggests many investors now view the city as one of the safest and most attractive places in the UK to put their money, thanks to its long-term growth prospects, continued economic investment and stable rental demand.”
The findings are based on The Property Buying Company’s analysis of 295 investors and 464 city and regional investment preferences.