In last week's article, I promised that I would look at the
Weymouth property market and compare its rental yield and capital growth for
the buy to let investor. 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.
The average value of a property before the crash of 2007 in
Weymouth was around £217,000. The year after, in the 2008/9 slump, average
prices dropped in the town to £191000. Considering values today in Weymouth are
around £213,000, if you bought in 2009, values would have increased by just over
13.6% which is an excellent increase. If
you had bought in 2007 however you would be a little out of pocket and possibly
only now beginning to move into profit.
So, as I have said before,
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. I have done some research: a nice
terraced cottage sold in Southill in 1997 for £43,000. It sold again in June 2012 for £147,000. Now
the average property value increase for the surrounding area in that time frame was 200% whilst that
property saw capital growth of nearer 241%. That same property is now valued at
£163,000 and would probably achieve near that showing another 11% growth for
the lucky owner (who happens to be one of our Landlords). Average growth in that area over the period
of time was 200% so this particular property increased in value by 40% more than the average.
Nationally, only half the number of properties are changing
hands yearly at the moment compared to 2006/2007 so we still have some way to
go but the signs are encouraging. None
of this is to say everything in Weymouth turns to gold. There are good
properties, which have dropped in value and others like the above that have
done better.
As we sell as well as
manage property, I can always give my landlords (and landlords who aren't with
me but want a second opinion and even people who are thinking of becoming
landlords), my unbiased opinion on what to buy and not buy. I pride myself by
knowing the market intimately, so I can give some great advice and opinion. It
might not be what you want to hear but, I can assure you, it will be sound
advice. If you want to chat about property investment in the area, be it
Weymouth, Dorchester or any surrounding village, with a view to buying right
and building yourself some capital growth for the future please feel free to
pop in. My offices on are St Thomas Street in Weymouth and I look forward to
seeing you soon.
Next week we will look at rental yields/returns on different
types of property to be found on the market in Weymouth.
Philip Wakefield – Martin and Co, Weymouth
philip.wakefield@martinco.com
No comments:
Post a Comment