City focusManchester: A city of first time buyers

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Executive summary

higher proportion of mortgage lending in Manchester goes to first time buyers than in any other

English city outside London, with half of all mortgages going to first time buyers. Taking into account those buying in cash, over a third (35%) of houses are bought by first time buyers. In 2013, new buyers put down an average deposit of £26,000, an increase of 13% from 2012. The largest deposits were put down by first time buyers in South Manchester, most notably in Sale and Chorlton, where the average deposit stands at £44,000. Manchester’s popularity with first time buyers can be attributed to the

decline in the number of houses being built between 2003 and 2011 in neighbouring Cheshire and Lancashire.

Those first time buyers in Manchester who don’t get onto the housing ladder by the age of 35 are increasingly living in the private rented sector. The number of rented properties has grown most quickly in areas where the oldest first time buyers are found. The 19 postcodes where first time buyers are older than average saw the private rented sector expand 140% between 2001 and 2011 compared to an increase of 89% across England.

A

ManchesterA city of first time buyers

M38

M7

M4

M21

M12

Little HultonSmallest average first time buyer deposit: £9,000

ChorltonLargest average first time buyer deposit: £44,000

LongsightOldest first time buyers: Average age 38

Northern QuarterYoungest first time buyers: Average age 28

BroughtonHighest proportion of mortgages going to first time buyers: 69%

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The most popular locations for first time buyers are the 12 postcodes which en-circle the city centre, accounting for just over half of all purchases by new buyers. Smaller Victorian terraces with excellent transport links into the city centre attract first time buyers and students alike.

In the more affluent suburbs of South Manchester, sales to first time buyers comprise a much smaller proportion of transactions. Around 40% of mortgage lending is to first time buyers, with the

majority of lending going to upsizing second and third time buyers looking for a larger property and more green space. Those new buyers who do decide to live in Chorlton (M20), Didsbury (M21) and Sale (M33) put down the largest de-posits, paying an average of £157,000. This is a premium of 34% above the £117,000 paid by the average first time buyer in Manchester.

ManchesterA city of first time buyers

houses is bought by a first time buyer

1 3

The first time buyer capital

Research by Countrywide plc shows Man-chester has the largest proportion of mort-gage lending going to first time buyers compared to anywhere else in the country outside London. 50% of all mortgage lending in the city goes to first time buyers which means that once those buying in cash are accounted for, 1 in 3 houses

(35%) is bought by a first time buyer. An improving housing market has translat-ed into the number of first time buyers growing at twice the rate of homeowners. In 2013 there were a total of 10,000 first time buyers in the city. While significant, this compares to 20,000 first time buyers getting onto the housing ladder in 2007.

Proportion of mortgage lending to first time buyers

Postcodes with the largest proportion of mortgage

lending to first time buyers:

M7 BROUGHTON M19 HEATON CHAPEL M50 SALFORD QUAYS M6 PENDLETON M14 FALLOWFIELD

69%

66%

66%

65%

62%

1.

2.

3.

4.

5.

Source: Countrywide plc 2014

IN

More than 60%

55% - 60%

50% - 55%

45% - 50%

Less than 45%

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CITY FOCUS

Older first time buyers are relying on the private rented sector for longer before making their first purchase. The expansion of the private rented sector has been larg-est in areas where the oldest first time buy-ers are found. In the 19 postcodes where the age of the first time buyer is older than average, the number of households in the private rented sector grew 140% between 2001 and 2011, 30% more quickly than the 23 postcodes where first time buyers were younger than average.

The lowest house prices and the oldest first time buyers are found to the North East of Manchester, in areas where a large proportion of households live in the private rented sector. In M18 (Gorton) the average first time buyer is 37 and 30% of all households live in the private rented sector. Between 2001 and 2011 the pro-portion of privately rented households in M50 more than tripled, the largest expan-sion of the private rented sector anywhere outside the city centre.

ManchesterA city of first time buyers

Linking age, price and tenure

The average first time buyer in Manches-ter is 32, the same age as the average first time buyer nationally. The youngest first time buyers tend to purchase in some of the most expensive areas, predomi-nantly in the city centre (average age 29), attracted by the lifestyle and the number of new developments marketed specifical-

ly at first time buyers. Such areas require some of the largest deposits. The North-ern Quarter (M4) is home to the youngest buyers in Manchester, yet the average first time buyer puts down a deposit of £38,000, the third largest in the city.

Average age of first time buyers

Source: Countrywide plc 2014

M4 NORTHERN QUARTER M26 RADCLIFFE

M3 CITY CENTRE & DEANSGATE

28

29

29

1.

2.

3.

YOUNGEST

M12 LONGSIGHT M18 GORTON M50 SALFORD QUAYS 36

37

381.

2.

3.

OLDEST AGE

TO LET

Older than 35

34 to 35

32 to 33

30 to 31

Under 30

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CITY FOCUS

Manchester in a minute

Prices have recovered more quickly than in other northern cities

In 2013, price growth has been strongest in Central and Southern Manchester

Over the course of 2013, prices rose in 40 out of the 42 Manchester postcodes by an average of 3.6%. Price growth has been led by the City Cen-tre and South Manchester with prices in M2 and M20 rising 6.1%.

While first time buyers account for half of all mortgages and sales, transactions remain around half the 2000 – 2007 average leaving many first time buyers struggling to get onto the housing ladder.

The number of buyers competing for each prop-erty coming onto the mar-ket has increased, driving house price growth.By the end of 2013 this growth has meant prices are now 18% below their peak compared with 22% at the end of 2012.

50%

35%

Transactions remain below the long run average

Proportion of mortgages going to first time buyers (2013)

Taking into account cash purchases and one in three sales is to a first time buyer (2013)

60,000

51,000

29,000

2007

2001

2013

Less than 0%

0% - 2%

2% - 4%

More than 4%

Source: Countrywide plc 2014 & ONS 2014

ManchesterA city of first time buyers

Proportion of households living in the private rented sector

POSTCODES WHERE

PRICES HAVE FALLEN

POSTCODES WHERE PRICES HAVE RISEN

IN 2013

Jan

08

Ap

r 0

8

Jul 0

8

Oct

08

Jan

09

Ap

r 0

9

Jul 0

9

Oct

09

Jan

10

Ap

r 10

Jul 1

0

Oct

10

Jan

11

Ap

r 11

Jul 1

1

Oct

11

Jan

12

Ap

r 12

Jul 1

2

Oct

12

Jan

13

Ap

r 13

Jul 1

3

Oct

13

100%

95%

90%

85%

80%

75%

70%

BUYERS TO EACH SELLER

IN Q1 2013

BUYERS TO EACH SELLER

IN Q1 2014

7.6

9.2

Newcastle upon Tyne

Leeds

Liverpool

Manchester

PE

RC

EN

T O

F P

EA

K P

RIC

E

2001 2011

Source: ONS 2014 and Countrywide plc 2014

1

2

3

12 month HPI growth

More than 6%

4% to 6%

2% to 4%

0% to 2%

Less than 0%

More than 20%

15% to 19%

10% to 14%

5% to 9%

Less than 5%

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CITY FOCUS

The 1996 IRA bomb proved to be a catalyst for the regen-eration of central Manchester. In the following 10 years significant amounts of investment poured in to transform the city centre. Between 1997 and 2007 house prices in the city centre increased 160% with a large proportion of sales achieved off plan. The downturn in 2008 hit the centre particularly hard and a significant number of de-velopments collapsed uncompleted. City centre markets remain slow, with some who bought immediately prior to 2008 in negative equity. There are signs in early 2014 however that the Help to Buy Mortgage Indemnity scheme has started to drive transactions in the city centre back towards pre-2008 levels.

For now the focus of the Manchester market has shifted eastwards and southwards from the city centre. A morato-rium on new build development across a number of neigh-bouring local authorities has increased the attractiveness of Manchester to first time buyers unable to find smaller,

affordable property. New buyers have been supported by a flourishing tourism industry, Manchester being the third most visited city in the UK after London and Edinburgh.

The rapid expansion of the Metrolink system into South and East Manchester has significantly improved access into the city centre. To the East, the Metrolink extension to Ashton has coincided with the Sharp project which pro-vides space for TMT start-ups. Manchester now houses the largest cluster of creative and technology businesses in the UK outside of the capital. Further south and Wythenshawe, a 1960s urban extension, will benefit significantly from the improved connectivity.

Looking to the future and this southern extension of the Metrolink will connect Manchester Airport to central Manchester, coinciding with the development of a £650 million Airport City. It will provide 1.4m ft² industrial space and a further 1m ft² of office accommodation.

View from the streets:Mark Alcroft, Managing Director of Bridgfords

Why Manchester?

With around half of all mortgaged new build property sales nationwide going to first time buyers, the strong performance of the Manchester new build market relative to surrounding areas has provided large amounts of housing attractive to first time buyers. While the downturn in 2007 saw house building in Greater Manchester fall by 65%, the decline in new construction in neighbouring Cheshire and Lancashire has been larger and reflects a longer term

downward trend in house building in the region. Between 2003 and 2011 planning permission for new development was granted only in special circumstances in parts of both Cheshire and Lancashire meaning that house building slowed substantially while continuing apace in Manchester. As a result, first time buyers in areas surrounding Manchester headed for the inner city where new stock was availa-ble and affordable.

Manchester has been building more homes than its neighbours

198

5

198

6

198

7

198

8

198

9

199

0

199

1

199

2

199

3

199

4

199

5

199

6

199

7

199

8

199

9

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

Manchester

Cheshire

Lancashire

Source: ONS 1985 -2013

HO

US

E B

UIL

DIN

G A

S A

PE

RC

EN

TAG

E O

F 19

85

RA

TE

ManchesterA city of first time buyers

0%

20%

40%

60%

80%

100%

120%

140%

House building reaches the highest level across England and the North West since 1977

Planning permission granted only in special circumstances in parts of Cheshire and Lancashire

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