Thursday, 15 May 2014
Amber Valley/ Erewash and Broxtowe .. good time to buy property?
Following last week’s article, I had an interesting chat with a chap who lives in West Hallam. He is thinking of buying his first buy to let property and he wanted my opinion on the state of the market and if it was a good time to invest.
He was particularly worried that with all the newspaper headlines of a booming housing market, there wouldn’t be any tenant demand for rented property. One of the best pieces of advice I can give to those looking to invest in property is a simple trick of the trade. You can judge the affordability of an area’s property market (and thus how much demand there could be) by simply finding the ratio of the average property price to the average salary. The lower the ratio, the more affordable property is.
When we put this to the test, we found that Ilkeston currently has an average property value of around £133,200 with the average salary being £18,528 per year. This is a ratio of 1 to 7.18. Meanwhile in Heanor, the ratio of property values to salary is 1 to 7.38 (as average salaries are £17,906 and values £132,200). Belper’s property values are an average £198,600, so with average salaries of £25,330, this gives a similar ratio of 1 to 7.84. However, it’s the buyers of Eastwood that should feel the happiest, with a much lower ratio of 1 to 5.66 (as average property values are £111,500 and salaries are in fact £19,675 ...Ikea must pay well!).
All these ratios are very fair, compared with other parts of the UK. However, the issue isn’t affordability, it’s the raising of the 5% deposit, which when you add buying fees and costs, will be in the order of between £7,000 and £12,000. Tenant’s inability to raise that sort of money for the deposit is driving demand for rental property. If you would like some advice about buying to let, be you a landlord with a portfolio or someone thinking of investing in rental market, please ring me on 01332 910499 or email on firstname.lastname@example.org