Thursday, 29 January 2015

West Hallam property market - Good Capital Growth?


 

Well my last article about West Hallam made the phone ring! The subject of investing in villages for buy to let is an interesting one. In fact it can be as risky as investing in student lettings or HMO’s (Houses of Multiple Occupation where everyone has a bedroom with a shared kitchen and bathroom). As I keep saying in these articles, investing in the Amber Valley, Broxtowe and Erewash property market is something that shouldn’t been done lightly.  For those new to the buy to let investment game, the yield is the yearly rent from a property reflected as a percentage of the value of the property (one might consider it in the same light as the interest rate from your savings account) whilst the 'Capital Growth' is the amount the property goes up in value each year reflected as a percentage of the value of the property.

Previously we said West Hallam property values were 5.5% above the 2007 peak of property prices (considering that average property prices in Derbyshire as a whole are currently 7% below the 2007 peak). However, property investment cannot be judged over short time frames and most certainly not by averages. Often, when looking at a market for a landlord, I like to take a longer look at the market, and consider 10 to 15 years a more suitable time frame for capital growth. After doing my research, looking at every West Hallam property that sold in 1999 (and there were quite a few!) and the very same property selling again 2014, average property values had risen on average by 172.5% in West Hallam, whilst in Amber Valley and Erewash they had only risen by, on average, by 127.3%

That's not to say everything in West Hallam turns to gold. A two bedroom modern town house on Farnham Walk in West Hallam sold in March 2005 for £104,000 and quite recently someone purchased the property again for £110,000.  This was only a rise of 5.7% over 10 years.  Interestingly, the property was purchased as a buy to let investment and is currently on the market for rent for £525 per month, giving the landlord a potential yield of 5.72%.   As we don't sell property, I can always give my landlords (or landlords who aren't with me but want a second opinion and even people who are thinking of becoming landlords for the first time) my unbiased opinion on what to buy and not buy. I pride myself by knowing the market with all its ups and downs, so I can give some great advice and opinion. It might not be what you want to hear but, I can assure you, it is what you need to hear.

 If you want to chat about property investment in the Ilkeston, Eastwood, Heanor and Belper areas, then if you buy right, you will build yourself some capital growth for the future. Our office is in Heanor and I look forward to seeing you soon or you can email me on lettings@sprucetree.co.uk

 

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