Expert predicts what lies ahead for Leeds city centre's residential market in 2024

The challenge of higher interest rates along with the end of Help-to-Buy has meant that housebuilders are increasingly turning to SFR funds as a means of propping up their targets – it seems that a shift towards longer term rental is well underway.

Leeds city centre has already seen a significant shift towards institutionally-owned apartment buildings, with multiple amenities and robust professional management.

The arrival of schemes such as Mustard Wharf by L and G, New York Square by Moda and Leodis Square by Dandara, coincided with the extraordinary impact of the end of Covid period on the rental market which effectively meant that two cycles of demand bumped into each other.

The net effect of this was an increase in average city centre rents to unprecedented levels. Underpinning this trend is the predominance of students from overseas, for whom the traditional affordability measures are largely irrelevant but there is plenty of evidence to suggest that local professionals also have an appetite for this new way of renting.

I believe 2024 is going to be another interesting year in Leeds city centre: the key sectors are the rental market, which is the engine room of any successful urban economic centre, the continuing upturn in the delivery of Purpose Built Student Accommodation and the proliferation of fractional sales schemes such as Springwell Gardens, Sky Gardens, Axis and Phoenix, which rely on sales to distant investors.

Sadly, there is little sign of the delivery of high-quality apartments or houses specifically aimed at owner occupiers, for which there is still huge pent up demand. This remains the area of greatest opportunity and whilst the likes of 2 Great George Street by Priestley are a step in the right direction, their sales campaign has been driven towards early off plan investor demand.

There have still only ever been a handful of sales at over £750,000 in Leeds City Centre which makes absolutely no sense in the context of the wider metropolitan area, where this sort of figure variously buys a four-bed semi in Rawdon or Roundhay or a three-bed end terrace in Otley. Recent sales of penthouses at 2 Great George Street for £1.3m and a new apartment listing at £1m may herald the emergence of a premium city centre market but we are a long way from the £1.95m being asked for a penthouse in the Deansgate Towers in Manchester.

It is likely that average city centre rents will increase again in 2024 and it would appear from salary data that there is still some headroom in affordability.

Sales activity in the mid-market is likely to increase, particularly as more and more developments are slowly unlocked through the impact of the Building Safety Fund. Many of these have been literally unsellable for a number of years due to cladding issues which has meant that those with average budgets have had very limited options.

Add into the mix the intriguing mortgage rate war which is currently playing out and it is clear that 2024 is highly unlikely to be the year of the crash.