Research for urbanbubble has shown that Manchester's rental market has seen a stabilisation in rental prices in recent months, after significant rises in 2021 and 2022. While studios and one-bedroom apartments experienced a gradual increase in rental value, two and three-bedroom apartments, as well as city centre houses, saw a minor decrease. Despite this, all rental types remain significantly above their pre-pandemic average, with only houses experiencing a slight decrease compared to February 2022.
Rental availability continues to be a major factor in the city, with 2023 seeing the lowest number of available apartments in any February on record. Letting activity has subsequently also been subdued, with the lowest number of February lets since February 2020 and down 15% compared to last year.
The data suggests that there has been a slowdown in the increase of rental values in recent months, particularly for the larger rental types such as three-bedroom apartments and houses. These two types of rentals saw the largest increases during the period of sharp rises between summer 2021 and summer 2022. The overall trend is showing signs of a market correction, with the rental values for all types of properties starting to flatten out, instead of steep rises as seen in the latter half of 2021 and the first half of 2022.
Comparing the averages of the last three months (December 2022 – February 2023) to the preceding three months (September – November 2022) gives a clearer picture of developing trends. The data indicates that studios and one-bedroom apartments continue to rise gradually, while other rental types have experienced slight decreases. For example, two-bedroom rentals have fallen by 0.9%, three-bedroom apartments by 1.5%, and houses by 1.2%. However, these changes were minor and suggest a flattening of all rental values.
Looking at the annual changes, rental prices have increased significantly compared to last year. For example, studios saw an increase of 14.3%, one-bedroom apartments an increase of 8.9%, two-bedroom rentals an increase of 5.6%, and three-bedroom apartments an increase of 21.2%. On the other hand, city centre houses experienced a slight decrease of 2.6% compared to February 2022.
Rental supply remains heavily restricted, with rental availability still at record lows following the Covid-19 pandemic. February 2023 saw the lowest number of available apartments in any February of the last four years, with only 528 available apartments compared to 552 last year and down 76% from February 2021's high of 2,216 apartments.
Two-bedroom rentals now make up 62.3% of the market, compared to 24.4% for one-bedroom apartments, reflecting the trend of the last few years. Rental activity typically peaks in summer and is subdued during the winter months. The summer of 2021 saw the highest number of apartments let, with 1,066 lets in July. Since then, the number has decreased, and last year fell to below pre-pandemic levels.
The lack of available properties on the market or under construction means that 2023 is shaping up to be another subdued year. February 2023 saw only 381 lets, the lowest February since 2020 (342 lets) and down 15% compared to last year's 468 lets.
Overall, the Manchester rental market is showing signs of a correction with a flattening of rental values and a lack of rental availability. However, rental prices are still significantly higher than pre-pandemic levels, and it remains a particularly strong opportunity for landlords and investors alike.
With demand for rental properties in Manchester so high right now – particularly in the luxury market - it is essential that landlords are supported by a property manager that has the capability to deliver an exceptional level of service for both the landlord and resident.
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