by Graham Norwood, Financial Times @ 20th March 2015

The city is leading the region's recovery and is at the centre of plans to create a 'northern powerhouse'

Manchester's rich history since the Victorian era ranges from rapid industrialisation to the creation of global football and music brands. Yet it is a new, still emerging, role that may be key to redefining the city and its housing market in the future. Manchester is now at the geographical and political centre of a drive to create a “northern powerhouse” — alongside Liverpool, Leeds and Sheffield — that would act as a north of England counterbalance to London's economic and cultural domination of the south of the country.

The powerhouse idea, promoted this year in “Unleashing Metro Growth”, a report by former Goldman Sachs economist Jim O'Neill, has been seized upon by Manchester's civic leaders. They have struck a deal with the UK government to emulate London by gaining more local control of transport, skills and policing, and electing a powerful mayor, despite the fact the city voted against such a post as recently as 2012.

“Manchester has recovered from the recession more quickly than other cities in the north and the economic outlook is more positive than that in Liverpool and Leeds in the short to medium term,” says Grainne Gilmore, head of research for estate agency Knight Frank.

As evidence of this newfound confidence, Manchester planners have just approved Axis, a 28-storey city-centre tower containing 173 high-end apartments — some of which are likely to fetch £425 per sq ft, one of the highest prices in the city. Elsewhere in Manchester about 2,733 homes are in the process of being built, according to analysis by Knight Frank and building consultancy Glenigan, while planning consent has been secured for a further 3,937 homes.

Meanwhile, in the Greater Manchester metropolitan area — comprising 2.7m residents in 10 boroughs — average house values have risen 3.92 per cent over the past year, according to property website Zoopla. Across Greater London, average prices has risen 6.27 per cent in the same period.

In the past three years MediaCityUK, a 200-acre site at Salford Quays on the Manchester Ship Canal, has become home to parts of the BBC and ITV broadcasting empires, as well as the University of Salford's media department. The area has a Metrolink station — one of 92 on Manchester's seven-line tram network — which is being expanded as part of the Northern Hub scheme.

“MediaCity has been a significant trigger for the housing market with more than 2,000 professionals [relocating] from London. Several London law firms have opened regional offices in Manchester, too, bringing up more high-end buyers,” says Jeremy Hinds of Savills.

He says these purchasers have mostly sought homes in southern suburbs such as Hale, Altrincham and Wilmslow — locations that are also popular with footballers from Manchester's two Premier League clubs, United and City. These suburbs are also within a short drive of Manchester airport, Britain's third busiest airport (it handles 20m passengers a year). “These areas of south Manchester are the nearest we have to London-style suburbs and [they] have many of the most expensive homes in northern England,” says Hinds.

In Bowdon, near Hale, 10 miles south of central Manchester, a 9,380 sq ft Arts and Crafts-style house with 1.9 acres of land is on sale for £3.6m through Jackson-Stops. Close by, the same agency is selling a seven-bedroom house with 1.5 acres of grounds for £3.75m.

Such properties, although typical in their leafy suburbs, are the exception to the rule across Greater Manchester. “A few inner-city areas have seen regeneration projects such as the Green Quarter [north of the city centre] but . . . overall values are still low,” says Hinds.

While the average detached house in affluent Wilmslow, 12 miles south of the centre, costs £607,000, according to Zoopla, a similar house close to central Manchester would be £266,000. “And there are a few parts of the city where four-bedroom houses can be bought for not much more than £100,000,” says Hinds.

Regenerated areas such as Salford Quays and Spinningfields show what the rest of Manchester may become in the future. In Salford, a three-bedroom waterside apartment near MediaCityUK is on sale for £599,000 through Jones Lang LaSalle (JLL), while at Spinningfields the same agency is selling a two-bedroom apartment for £349,950.

In the city centre, meanwhile, the new Axis tower is set to be a landmark in more ways than one, according to Steve Hogg of JLL's Manchester office. “It's the first high-end resi scheme in the centre since 1 Deansgate [completed in 2002] and Beetham Tower [2006] so there's plenty of pent-up demand. There's scope for more of them, too,” he says.

Hogg believes that such developments, plus the political and media interest in a potential northern powerhouse — possibly with a high-speed rail link connecting nearby cities — has put Manchester on the map internationally.

“We're seeing Singapore, Hong Kong and Dubai investor interest, especially as capital appreciation predictions for Manchester for the next five years outstrip those for prime London,” he says, adding that JLL predicts prices in Manchester could rise 25 per cent by 2019.

“It's taken a long time for this to happen,” says Hogg, “but there's a real spring in the step of the residential market in Manchester now.”