Buying a property in Liverpool or Manchester

Demand for housing remains strong in the north-west of England and areas with strong investment and regeneration prospects continue to lead the way. Zoopla’s house price index report in August showed that Liverpool and Manchester continued to lead the way with house price growth and demand for property in these cities remains high. These figures were reflected again in Zoopla’s recently published September report which again showed that Liverpool and Manchester are leading the way with house price growth with little sign of demand slowing in the near future.

Liverpool leads the way in house price rises, however the city still has comparatively low average house prices at £139,300 and remains a very attractive proposition for property investors. The ongoing regeneration and investment in the city means that it continues to attract new inhabitants including both renters and buyers keeping the housing market strong and active.

Manchester, a few miles to the east, once again ranks as second on the list for house price gains and although their average house price is higher than Liverpool’s at £196,900, it still remains below the average UK house price. This means that Manchester remains an attractive proposition for graduates to settle as well as for young professionals to relocate to from other more expensive areas of the country. As with Liverpool, rental yields are high, making it a good prospect for investors.

Zoopla has been monitoring the effect of the end of the stamp duty holiday and has so far said that the cut is not reducing appetite in the market. While activity may begin to slow in 2022, the year is still expected to finish strongly.

Grainne Gilmore, head of research at Zoopla, says: “The ending of the ‘tapered’ stamp duty holiday has had little impact on buyer demand, which remains higher than typical levels for this time of year…We expect the market to remain busy compared to historical norms, and for price growth to remain in firmly positive territory at the end of the year, although lower than current levels… Stock levels will start to rebuild in early 2022 as market activity returns to more normal levels.”

Mortgage Rates

This optimism could well be shaped by what happens to mortgage rates in the coming months. Low mortgage rates have become an important feature of the housing market over the last decade and have been a support for increased house prices. Home buyers have become used to low mortgage rates, typically ranging between 2% and 3%, with some even lower deals for those with decent LTV ratios. The regulation of mortgage lending since 2014 has stopped lower borrowing costs creating an unstainable boom in house prices and the market is better insulated against from higher mortgage rates than in the past, but it not immune. Zoopla projects that interest rates will rise, and mortgage rates will reach 3% by the end of 2022, the highest rates for some time, but it important to note that these are still historically low figures.

Any increase in borrowing will impact the purchase power of new borrowers, but this depends heavily on how much rates increase by. Zoopla’s analysis “suggests that an increase in mortgage rates to 3% will not have a major impact on the price buyers could pay for homes but any increase in rates could deter some would-be buyers and impact sales.” Exiting borrowers will be less impact as over 80% of existing mortgages are on a fixed rate, some for as long as 5 years or more. In addition to this, all new borrowers since 2014 have had to prove to their lender that they can afford mortgage rates of up to 7% which provides additional resilience for the existing borrowers.

Outlook

The outlook does not signify a massive shift in the market, there may be mortgage rate rises but they will not spiral. Interest in the market may slow but the housing market should continue to see gains prices throughout 2022 in the north west, albeit at a reduced pace. Demand for buying a property in Liverpool or Manchester continues to demonstrate a robust market with good growth and the regeneration and investment in both cities means they will remain an attractive proposition for some time to come.

Avery and Co have surveyors based in both Liverpool and Manchester and across the north west as a whole. Our surveyors have an excellent understanding of the areas they cover and have local knowledge of the different aspects of the cities. If you are thinking of buying a property in Liverpool or Manchester, then advice from an independent RICS surveyor is strongly advised. Our surveyors are all members of RICs and are friendly, approachable and professional. Buying a house is usually the largest single purchase of our lives and it makes sense to have all of the knowledge that you can to ensure that you are making a good investment. Get in touch today to see how we can help, we’d be happy to talk things through with you.