City focus Manchester: A city of first time buyers

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1 City focus :

2 Executive summary A higher proportion of mortgage lending in 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 The largest deposits were put down by first time buyers in South, most notably in Sale and Chorlton, where the average deposit stands at 44,000. 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 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. Little Hulton Smallest average first time buyer deposit: 9,000 Broughton Highest proportion of mortgages going to first time buyers: 69% M38 Northern Quarter Youngest first time buyers: Average age 28 M7 M4 M12 M21 Longsight Oldest first time buyers: Average age 38 Chorlton Largest average first time buyer deposit: 44,000

3 The first time buyer capital Research by Countrywide plc shows has the largest proportion of mortgage 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 translated 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 Proportion of mortgage lending to first time buyers Source: Countrywide plc 2014 Postcodes with the largest proportion of mortgage lending to first time buyers: 1. M7 BROUGHTON 69% 2. M19 HEATON CHAPEL 66% 3. M50 SALFORD QUAYS 66% More than 60% 55% - 60% 50% - 55% 45% - 50% Less than 45% M6 PENDLETON M14 FALLOWFIELD 65% 62% 1 3 IN houses is bought by a first time buyer The most popular locations for first time buyers are the 12 postcodes which encircle 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, 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 deposits, paying an average of 157,000. This is a premium of 34% above the 117,000 paid by the average first time buyer in.

4 Linking age, price and tenure The average first time buyer in 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, predominantly in the city centre (average age 29), attracted by the lifestyle and the number of new developments marketed specifically at first time buyers. Such areas require some of the largest deposits. The Northern Quarter (M4) is home to the youngest buyers in, 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 OLDEST AGE M12 LONGSIGHT M18 GORTON M50 SALFORD QUAYS 36 YOUNGEST 1. M4 NORTHERN QUARTER 28 Older than to to to 31 Under M26 RADCLIFFE M3 CITY CENTRE & DEANSGATE TO LET 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 largest in areas where the oldest first time buyers 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, 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 proportion of privately rented households in M50 more than tripled, the largest expansion of the private rented sector anywhere outside the city centre.

5 Proportion of households living in the private rented sector Source: ONS 2014 and Countrywide plc 2014 More than 20% 15% to 19% 10% to 14% 5% to 9% Less than 5% in a minute Source: Countrywide plc 2014 & ONS In 2013, price growth has been strongest in Central and Southern 12 month HPI growth More than 6% 4% to 6% 2% to 4% 0% to 2% Less than 0% Less than 0% 0% - 2% 2% - 4% More than 4% POSTCODES WHERE PRICES HAVE RISEN IN 2013 POSTCODES WHERE PRICES HAVE FALLEN Over the course of 2013, prices rose in 40 out of the 42 postcodes by an average of 3.6%. Price growth has been led by the City Centre and South with prices in M2 and M20 rising 6.1%. 2 Prices have recovered more quickly than in other northern cities Newcastle upon Tyne Leeds Liverpool PERCENT OF PEAK PRICE 100% 95% 90% 85% 80% 75% 70% Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Jan 10 Apr 10 BUYERS TO EACH SELLER IN Q BUYERS TO EACH SELLER IN Q Jul 10 Oct 10 Jan 11 Apr 11 Jul 11 Oct 11 Jan 12 Apr 12 Jul 12 Oct 12 Jan 13 Apr Jul 13 Oct 13 The number of buyers competing for each property coming onto the market 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 Transactions remain below the long run average , , ,000 Proportion of mortgages going to first time buyers (2013) 50% Taking into account cash purchases and one in three sales is to a first time buyer (2013) While first time buyers account for half of all mortgages and sales, transactions remain around half the average leaving many first time buyers struggling to get onto the housing ladder. 35%

6 Why? With around half of all mortgaged new build property sales nationwide going to first time buyers, the strong performance of the 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 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. As a result, first time buyers in areas surrounding headed for the inner city where new stock was available and affordable. has been building more homes than its neighbours Cheshire Lancashire Source: ONS HOUSE BUILDING AS A PERCENTAGE OF 1985 RATE 140% 120% 100% 80% 60% 40% 20% 0% House building reaches the highest level across England and the North West since Planning permission granted only in special circumstances in parts of Cheshire and Lancashire View from the streets: Mark Alcroft, Managing Director of Bridgfords The 1996 IRA bomb proved to be a catalyst for the regeneration of central. 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 developments 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 market has shifted eastwards and southwards from the city centre. A moratorium on new build development across a number of neighbouring local authorities has increased the attractiveness of to first time buyers unable to find smaller, affordable property. New buyers have been supported by a flourishing tourism industry, being the third most visited city in the UK after London and Edinburgh. The rapid expansion of the Metrolink system into South and East has significantly improved access into the city centre. To the East, the Metrolink extension to Ashton has coincided with the Sharp project which provides space for TMT start-ups. 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 Airport to central, 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.

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