Published: March 22, 2023

Where to invest in the UK property market in 2023

Written by Amber Furr

The UK property market has seen unprecedented changes since the start of the pandemic. From house prices continually rising to a shift in buyers’ preferences, COVID-19 has changed the way we live, rent, and buy property for the long term.

Putting this impact into perspective, Halifax recently reported a staggering +20.4% increase in house prices over the last three years, compared to just +7.8% in the three years pre-pandemic.

Helping buyers navigate their investment decisions, JLL recently published their annual Big Six Residential Report, which compares market activity, house prices and rental growth across 6 UK cities outside of London in the year to December 2022. The ‘Big Six’ cities include Manchester, Birmingham, Bristol, Leeds, Glasgow, and Edinburgh.

Watch our latest podcast with JLL’s Director of Residential, Marcus Dixon, to hear it directly from the expert.

Headlines of JLL’s Big Six Residential Report

  • All 6 cities saw house price and rental growth in 2022
  • Increased mortgage rates did impact the sales market in the second half of the year
  • Rental growth hit record levels, up by an average of 15.8% in 2022 across all 6 cities
  • Manchester saw the strongest rental growth, up by 22% in 2022
  • Consistently high demand for Manchester property has meant the city has been JLL’s top performer for the last 3 years

Read our latest blog to find out what is attracting people to Manchester in 2023.

Future growth forecasts (2023-2027)

City5-Year Sales Forecast5-Year Rental Forecast

Source: JLL Big Six Residential Report, March 2023

Manchester and Birmingham are set to see the strongest house price and rental growth over the next five years, largely down to their thriving job markets, large-scale regeneration, and status within government high-speed railway, HS2, which will transform both cities into London commuter hot-spots overnight.

What are the key factors transforming the UK rental market?

Key drivers for significant rental growth across UK cities include increased demand for city living post pandemic, as well as market factors such as rising mortgage interest rates and the end of the help-to-buy scheme keeping prospective buyers in an already squeezed rental market. This supply and demand imbalance is driving rental values to record levels.

For investors, both Manchester and Birmingham are attractive propositions due to their attractive growth prospects. For renters, both cities offer a range of new homes in prime city centre locations with easy access to local amenities – including shopping, leisure and entertainment – making them desirable for those looking for quality rental homes in a city environment.

Why invest in Manchester?

Investing in Manchester property can be a great way to secure your financial future. With the city’s booming economy and attractive rental opportunities, it is no wonder that global and domestic investors are choosing Manchester year after year.

Offering market-leading returns in the form of rental yields and strong capital growth, Manchester’s undersupplied rental property market underpins its strong investment potential. With an unrivalled lifestyle offering, a growing talent pool, and a graduate retention rate of over 50%, Manchester’s growth is only just beginning.

Read our blog on 8 venue openings transforming Manchester’s rental market here.

Why invest in Birmingham?

Still at the start of an exciting new growth curve, now is the time to invest in Birmingham property. JLL cited the 2022 Commonwealth Games as a key driver for the city’s strong house price growth forecasts by 2027. Following the legacy of Manchester’s 2002 Games, from the torch being lit at the opening ceremony to one year later, house prices rose by 24%.

The job market in Birmingham is strong, with a number of major employers such as HSBC, Goldman Sachs and Jaguar Land Rover driving demand for homes in the area. This ‘North shoring’ trend of blue-chip employers choosing regional cities as an alternative to the capital is only set to increase as HS2 nears completion, cutting the commute time between Birmingham and London to just 49 minutes.

The city has seen a large influx of students due to its vibrant university scene, offering potential investors an opportunity to take advantage of the second highest graduate retention rate (41%) outside of London.

Overall, JLL’s Big Six Residential Report paints an encouraging picture of the UK property market outside of London and confirms that Manchester and Birmingham are two of the leading cities for rental growth over the coming years. With strong demand from both buyers and renters, these cities offer attractive opportunities for any investor looking to add a city centre property to their portfolio.

At Select Property, we only develop in the UK’s highest performing cities. With opportunities in Manchester and Birmingham, our market-leading returns and end-to-end investment experience makes global investors choose Select Property year after year. Contact us to find out how UK property could work for you.

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