Headline news from Q4 2022
- Mortgage approvals at lowest level for 2 years
- Number of households renting doubles over past 20 years
- Apartments and urban areas gain in popularity with both buyers and tenants
- Affordability and value for money will be the driver for 2023
With the UK experiencing the highest inflation levels since 1981*, increasing at an average rate of 1% a month** during the first half of 2022, the Bank of England’s response was to increase interest rates from 0.25% at the beginning of the year to 3.5% by December. Equating to an increase of 1,300% the mortgage market was naturally disrupted. Many buyers who were in a position to secure a mortgage and buy their first home or perhaps move to a larger property, were suddenly no longer able to afford the new interest rates, resulting in approvals hitting a 2 year low. This resulted in first time buyers having to remain as renters for the foreseeable future. The two go hand in hand, with mortgage approvals down, the number of renters increases.
The increased pressure on rented accommodation only exacerbates a trend which was already being seen, so much so the term ‘generation rent’ had previously been coined with the 2021 census results showing 1 in 5 households now rent.
When you think of the impact covid had on the property market, you instantly – and rightly so – think of the commercial sector. However, trends were also seen with residential property, and with the rise of remote working came the rise of buyers and tenants looking for properties with more space and outside of the cities. Demand for idyllic rural and coastal areas dominated the housing market. Less than two years later, the dynamics have changed and we are now seeing this trend already reverse. Apartments and urban areas are forecast to see the most demand as affordability and value for money are prioritised by buyers and tenants. With the cost of living impacting all households across the country, ongoing household bills have become a major factor in the decision process.
With seven out of ten purchases being secured with a mortgage, buyers need to ensure they have a salary that can cover the monthly cost. This therefore is another key consideration for any buyer and impacts the location they choose to live, with London and surrounding areas seeing the lowest affordability and therefore the lowest growth, in contrast to Greater Manchester, home to 2 of the UK’s 3 highest growth regions, Bolton and Oldham (Zoopla).
Graph data from Zoopla
The mindset of tenants is changing. Many would-be-buyers are now having to rent instead – a key factor in driving rental prices to the highest rate since records began. With renting now being a longer term prospect, tenants are paying more attention to their living environment, opting for properties with a community. This can be created with the extra facilities offered in a development, such as communal work spaces, social areas, and group classes/activities. This has been driven further as the cost of socialising at restaurants and other activities has increased dramatically, the importance of a community at the residence has become even more paramount with tenants spending more time within their complex. With cost still being a significant factor, tenants are also now paying more attention to their ongoing bills, with online searches for ‘bills all included’ up by 57% (rightmove). For those paying their own utility bills, the EPC rating of a property – a guide that states the energy efficiency of a property – has become an integral factor to look at. Naturally apartments – in particular newly built apartments – achieve better EPC ratings. This, along with the facilities being incorporated into new build apartment developments has resulted in demand for this type of accommodation soaring.
Across our portfolio of residential apartments we are seeing minimum annual rental increases of 10% with many properties achieving up to 30% increased rents compared to the previous year. Needless to say our residential portfolio continues to remain fully occupied.
Last month, both our commercial and residential teams passed their health and safety ISOH qualification, in line with our pledge to keep your assets safe and compliant in an ever changing regulated world.
We need more stock! Do you, or someone you know, have any properties in the Manchester or Liverpool area? Through our dynamic management team we can maximise your asset’s profitability. We have a waiting list of tenants looking for properties in Manchester & Liverpool city centre so if you do have any properties, please get in touch. We are pleased to offer a referral fee for any new management instructions that sign up for 1 year’s full management with us of £150 for a 1 bed and £250 for a 2+ bed. Just contact: email@example.com
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Commercial property has been a challenging sector since the pandemic, as companies continue to adjust and work out what their office requirements are for a post covid work environment as they adapt to the new ways of working which have now become the norm. We are of course referring to remote working, hot desking, and office set-ups with a greater focus around collaboration and creativity in replacement for your typical rows of desks. Traditional office layouts don’t meet this criteria and landlords that are able to adapt their office spaces to be inline with this ultimately get the business. Our dedicated commercial asset management team does exactly that, – listening to the tenants, offering flexible working spaces and updating, adjusting and re-styling the offices as demand requires. With that, our portfolio continues to see both increased occupancy and rental rates.
We are pleased to announce a new lease has been agreed with operator, Arts Bar, who will run the cafe bar at the heart of the Elevator building, Liverpool. This is the second venue Arts Bar will operate in the city following the success with their first venue and amazing 18,000 Instagram followers. The bar will be a mix between the arts and music, with a live event every night such as comedy nights and concerts.
Transport House, Junction
Good news in Manchester with a number of new tenants moving into the office space in Q1 2023, bringing the total occupancy of Transport House to 95%, up from 67%. The new tenants are a mix of support services, a recruiter and a design company. This is testament to the notion of adapting office spaces to fit the new needs of companies and high occupancy levels can be achieved.
Feel Good Club have now completed their expansion into the 2nd ground floor unit at Hilton House which will provide them with a much larger kitchen area following their success since moving to the building and creating a communal hub for those working in and near Hilton House. Their new menu will be launched at the end of January!
Developments & Construction
Work at SONA has been moving forward at pace with the external elevations now nearly complete. In Q1 2023 the focus will move on to the internal courtyard elevations, while inside the building the fit out is underway, with boarding nearly complete and finalising the mechanical & electrical installation. With completion on target for July this year, we are now developing the furniture packs in accordance with the interior design specification, with a final finish that will be both stylish and functional.
Royal Canal Works
Over the course of Q4 2022, the foundations have been poured for the 2 apartment buildings, and the steel frame erected for the first block. Q1 2023 will see the frame for the second block being erected following which the external walls shall commence, keeping progress on track for completion at the end of the year.
Currently a commercial building, plans are being drawn up to convert the 27,000 sq ft centrally located building into 45 apartments. This will see a small extension being added to the roof of the building creating a mezzanine level to the top floor creating much sought after duplex apartments. Located in the heart of Liverpool and minutes from shops, cafes, street food traders, bars, restaurants and theatres, as well as benefiting from a train station opposite, Centric House will offer residents the true city living experience with the city’s abundant amenities at their fingertips.
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The Greater Manchester Combined Authority has announced that its long-term plan, Places for Everyone, has moved into its next phase. Insider Media.
Rightmove published its July House Price Index report, Rightmove.