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Development pipeline failing to keep pace with demand for city centre living
Manchester, July 24, 2017 – The under-supply of city centre housing in Manchester is set to continue for at least another five years, driving up capital values and rents, according to JLL.
New research from the property consultant shows that at the start of 2017 the city centre had 3,000 homes fewer than it needed. While this shortfall is set to decrease as development activity grows in the city, rising demand levels will mean that Manchester will continue to face an under-supply to 2023 – when there will still be a requirement for a further 1,650 homes.
Rapid population growth and the popularity of city living is contributing to sustained high demand. The current development pipeline is not expected to keep pace with growth in the city centre's population by 80,000 to 2024 according to Manchester Place.
Stephen Hogg, lead director - regional residential at JLL in Manchester, said: "Residential development in Manchester is becoming increasingly high profile, in part due to the city emerging as a hot spot for high-quality private rented sector (PRS) schemes. Inevitably, this buzz has led to speculation that oversupply is on the horizon, when in fact the opposite is true.
"Manchester is attracting and retaining more graduates, young professionals, and direct investment. Last year 47 firms either set up and created jobs for first time or expanded their existing operations, all of which is contributing to demand for city centre living.
"The current development pipeline means the city will not keep pace with that demand.
"With our analysis predicting that capital values and rents are set to increase by 28.2 per cent and 20.5 per cent respectively until 2021 – which is above the national average – the city centre's fundamentals will continue to remain appealing for institutional and foreign investors. But this appeal must be translated into development activity if the city centre market is to continue to grow."
According to JLL's figures, the average home in the city was selling 70 per cent quicker at the start of 2017 versus the same period in 2016 – down to nine days.
JLL predicts house price growth of 18.1 per cent in the North West over the next 5 years.
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