Cost of living woos Manchester's tech workers but can the private rental sector keep up?
Tech workers in Manchester highly value the amenities on offer in the city, as well as the quality of life.
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The cost of living is also a key factor, leading Manchester to out-score other tech hubs such as London, Cambridge and Oxford on this measure, according to a recent survey by TechNation.
In terms of ‘liveability’, the highly-regarded Economist Intelligence Unit annual global city rankings put Manchester in 35th place, the top UK city by some margin.
When it comes to the cost of living - housing is a key factor. This is a topical issue as housing affordability becomes a more pressing issue in many markets across the country.
For this reason, the relative affordability of housing is a factor that companies and start-ups are taking into consideration when deciding where to locate their headquarters or offices – alongside the access to graduate talent from universities near the town or city.
The demand to live in Manchester's city centre spurred dramatic growth in the rental sector in this area
Manchester is well-placed when it comes to young talent, given the number of UK-leading universities within the city. This is reflected in the fact that more than half of UK-domiciled students who graduated from universities in the Greater Manchester area in 2014/15 stayed in the city to start their first job, according to an analysis of the most recent HESA data by the Centre for Cities. This is a higher graduate retention rate than any other city apart from London.
But how does the city compare when it comes to housing costs? One measure of affordability is the house price to income ratio for first-time buyers.
"More than half of UK-domiciled students who graduated from universities in the Greater Manchester area in 2014/15 stayed in the city to start their first job."
In the North West, the average first-time buyer pays 3.5 times their annual salary for their first home, according to Nationwide. This compares to 9.4 in London. However, many young workers don’t buy a home straight after leaving university. Instead, they choose the flexibility of the rental sector.
The demand to live in the city centre spurred dramatic growth in the rental sector in this area. By 2011, nearly two-thirds of households in Manchester city centre were in the private rental sector (PRS).
The slowdown in residential development in Manchester after the financial crisis in 2007/08 initially weighed on the delivery of new homes, creating a shortfall in flats and homes across all tenures.
This picture is now changing, with a larger number of residential units now under construction in the city – some 12,000 - for sale and for rental.
Manchester is well-placed when it comes to young talent, given the number of UK-leading universities within the city.
In fact, Manchester is seeing the highest level of institutional investment into the private rented sector after London, creating purpose-built rental accommodation. The location and spec of much of this stock will appeal to young professionals.
In order to identify the priorities of these tenants when choosing somewhere to live, Knight Frank have undertaken one of the largest surveys of its kind, analysing responses from some 10,000 tenants living in PRS across the country.
"Manchester is seeing the highest level of institutional investment into the private rented sector after London, creating purpose-built rental accommodation. The location and spec of much of this stock will appeal to young professionals."
The Tenant Survey shows that among under-25s living in rental accommodation in the North West, nearly two-thirds expect to be living in the private rented sector in three years’ time, underlining the demand in this sector.
Affordability is the key concern for tenants, followed by location with the size of the property coming in third place in terms of priorities.
Average residential rents have risen relatively strongly over the last five years, with average asking rents for one and two-bedroom in central Manchester rising 20% over the last five years, according to Knight Frank analysis. This compares to a 5% rise in achieved rents for all properties across the wider North West region, according to ONS data.
An emerging market of highly - professionally managed rental property, along with additional new homes for sale, both in the centre of the city and in the Greater Manchester area, will enhance Manchester’s attraction to companies who are increasingly factoring in the opportunities and offering for their talent beyond the office.