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The regional view – the North West

Dave Rowlinson, Paragon Development Finance Relationship Director for the North West, gives his view on what’s underpinning the region’s strong property market and outlines where Paragon is seeing the greatest demand.

The North West property market is buoyant and arguably the strongest I have seen it in my 25-year career working across the region’s housing market.

This strength is particularly reflected in the new build sector and, at Paragon, we are seeing strong levels of applications from SME developers in the region. The latest Government figures available show that 30,170 new homes were completed in the North West in the year to March 2020, making the region the strongest outside of London and South East.

According to these figures, three times the number of homes were built in the North West in this period than a decade before, reflecting the resurgence of the area. Looking at housing starts, construction commenced on nearly 20,000 homes, placing the North West second behind London and the East of England.

Success lies in diversity

What makes the North West so popular? It’s difficult to pinpoint an exact reason because the region is so diverse. The North West now boasts thriving arts, culture and entertainment scenes, which are complemented with world class universities in its two main economic hubs of Manchester and Liverpool.

Away from the hustle and bustle, the region is home to attractive villages that are surrounded by beautiful countryside sat in the shadow of rugged peaks or lapped by lakes. Perhaps that diversity is key to its success.

Its economy has also made great strides, with modern high technology sectors, including ICT, pharmaceuticals and telecommunications, sitting alongside its more traditional manufacturing base. Creative and service industries are flourishing in the cities. Between 2010 and 2018, the North West economy grew by 31.4% and sits only behind London and the South East in size, whilst the region was also the fourth largest beneficiary of inward investment projects in 2019.

Another key to its popularity is its affordability. The North West is the second most affordable region to buy a new home in the UK behind the North East, based on the average property price to the average salary. However, when you look at new build housing affordability in isolation, it sits on top of the affordability chart, with the average new build property price of £229,950 7.74 times higher than the average salary of £29,700.

House price inflation is creeping up in the North West, but it remains one of the most affordable locations to buy or rent a home in the UK.

The defunct Greater Manchester Combined Authority Spatial Framework is being replaced by ‘Places for Everyone’, a joint collaboration between nine of the ten Greater Manchester boroughs. Whilst still in its consultation period, the aim is to bring a unified approach to development across those councils. Salford and Manchester have accounted for around two thirds of Greater Manchester’s 12,572 new build homes last year – but local authorities outside the central hub will come to the fore in the coming years under the proposed plans.

Smaller towns recording growth

We are seeing increased interest from SME housebuilders for areas such as Stockport, Rochdale and Bolton, which all boast good transport links to central Manchester and have ample land that can be released for development, particularly on brownfield sites.

There should be some exciting developments coming to the market in the coming years and I’m interested to see how the Government’s ‘Levelling Up’ agenda will feed through to the region’s secondary towns and cities, boosting hyper-local economies, as well as those in the major economic hubs.

More broadly, we are seeing demand for developments in areas which reflect the new hybrid way of working between office and home. The requirement to spend fewer days at the desk means that people are looking at areas on the outskirts of cities, so we’re seeing demand in locations like Didsbury and Chorlton on the periphery of Manchester and the Wirral, across the river to Liverpool. These locations benefit from being close to the city centres but being on the doorstep of green open spaces.

Elsewhere, homes in Lancashire and Cumbria remain popular, with increased demand from buyers for houses in locations close to Burnley, Preston, Lancaster and Carlisle. From a Paragon perspective this is a relatively untapped market in terms of SME housebuilder development, so we are keen to listen and speak to residential developers in these locations. We are supporting two developers with schemes in Cumbria and I expect more to follow suit.

At Paragon, we are keen to support our SME developer customers deliver the good quality homes the whole North West area requires to meet growing demand.

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Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Registered office 51 Homer Road, Solihull, West Midlands B91 3QJ. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551