One topic that I am always asked about, both by existing
landlords and new ones, is how one towns’ property values have performed
against another. When purchasing a buy to let property, there are two ways
landlords make money through property letting - capital growth and rental
income growth.
When a property increases in value over time, it is known as 'capital
growth'. Capital growth, also known as capital appreciation, has been
strong in recent times in both Amber Valley and Derby to Erewash areas but the
value of property does go up as well as down, and of course the local
conditions surrounding your property have a big effect. Rental income is what
the tenant pays you - hopefully this will grow over time too. If you divide the
annual rent into the value (or purchase price) of the property, this is your yield, or annual return.
A landlord from West Hallam who has a number of properties
in both Amber Valley and Erewash, asked me a few weeks ago about the difference
between the Ilkeston, Heanor, Eastwood and Belper housing markets. I was quite
surprised with my findings and wanted to share them with you.
The average property price in Ilkeston is currently £143,400.
In the last 3 months property values in Ilkeston, according to my calculations,
have risen by just over 3% which starts
to claw back the losses we experienced in the latter half of 2011 when values
dipped by nearly 6% in the town. However, irrespective of the roller coaster prices
that we have seen in the Ilkeston, they are still 15.4% higher than the 2009
slump (before you get the party hats on, we still have 6% to go before we reach
the 2007 peak!).
Looking across the rest of the area property values in
Heanor have risen by 3.5% taking an average property up to £137,100, whilst
Eastwood has seen property values rise by £3,200, taking an average property up
to £117,000, a rise of 2.8%. Finally,
Belper has seen the highest monetary value increase with an average property
rising by £6,000 in the last 3 months, but as average property values in Belper
were quite high to begin with, this is only a 2.9% increase in the last 3
months (an average property in Belper presently being worth £209,700).
Each Ilkeston, Heanor, Eastwood and Belper landlord will
have different needs and requirements in his or her property investment. We
don't sell property, so are able to give an objective and unbiased opinion on
what (and what doesn't) make a good property investment. Knowing what has
happened to values in different towns, enables us to spot any trends or opportunities
for buy to let landlords. If you would like to discuss my thoughts on the
rental markets, feel free send me an email to lettings@sprucetree.co.uk or
telephone me on 01332 910499
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