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