I was talking to a homeowner, who had a three bed terraced house on Petunia Crescent, in North
Springfeld, which had sold in a matter of days. He asked me if there something special
about the area, so I did a little research...
...I have included the surrounding road such as
Lupin Drive, Cornflower Drive and the off-shoot road in my findings to give
more of an idea about this particular area as they are similar styles of
property, being a mix of 1, 2, 3 & 4 bedroom flats & houses.
The properties that seem to have turned over the
most sales in the last year are three bed houses, which average at a selling
price of £242,888, two bed apartments, averaging with a selling price of
£136,785 and one bedroom apartments have an average selling price of £107,000.
Comparing the rental prices for these properties in
the last year for the same types of property, have been as follows. Three beds
have rented for an average rent of £1024, which would give you a fairly decent
5% yield against the average selling price of £242,888. Two bedroom apartments
rent with an average rent of £718, which gives us an amazing yield of 6.2%
against the average selling price of £136,785. But the one bedroom apartments
have completely outperformed the rest, potentially generating yields of 6.9%!
(Average rent of £623 against selling price of £107,000).
It appears on these figures that there are no bad
investments within this area, even the lower performing 3 bed houses are still
able to potentially generate you a 5% return. One thing to bear in mind with
the flats in this area however is that there are a lot that are being sold with
short leases, this means that the purchase price appears to be very attractive,
however it may make getting a mortgage a bit trickier as you won’t be able to
choose from as many lenders. We have been advised that extending a lease would
cost approximately £12,000 - £15,000 for these properties, so this is something
that you could factor in to your investment. If you plan on keeping the
property rented out for a few years, when you eventually come to sell the
property, look at extending the lease at this point. This means that you will
benefit from not only natural capital growth, but also a higher price, because
it will then have a long lease.
In the last 3 – 4 years, the property values on the
three bedroom houses has risen by 21%, on the one bed flats by 17%, but on 2
bedroom apartments, the rise in value has been 23%, the best of the bunch.
This research highlights to me that 2 bedroom
apartments are the better bet for this area, whilst they don’t give you the
highest yield, (6.2% is still pretty darn good!) the capital growth is the
better out of the types of property.
If
you would like to talk to me about property, feel free to pop into our office
on Duke Street.
