I was asked last week if postcodes make a difference to property values. In swanky West London, the difference between SW3 and SW10 can make values drop or rise by thousands, even millions of pounds. We have a slightly different clientele in Chelmsford. However, after doing some investigating, I did find out some interesting info.
The main postcode areas of the City are CM1 and CM2, with villages to the North and East being CM3 and the villages to the South CM4. Interestingly, the difference in growth in the different postcodes is very minimal. The postcode with the best performing housing market over the last 12 months has been the CM2, with average values rising by 5.3%. However, in a very close second and third come CM1 and CM3, with rises of 5.2% and 5.1% respectively in the same 12 month period with CM4 seeing more modest, yet still healthy rises of 4.8%. Look back at the areas over a longer period though and the differences are similar still. Over the last 5 years, values in the CM1 have risen by 17.8%, CM2 with a close second at 17.7% and CM4 17% and in a very respectful fourth, CM3 at 15%.
Property values are only half the story when it comes to property investment. The average yields tell a slightly different story. CM2 has current average yields, based on what is on the market now at 5.2%, whilst CM1 has current average yields of 4.8%. As we go into the villages, CM4 conforms with the norm in that yields tend to be lower in the villages with an average yield of just 2.4%, as property values in villages, especially nice ones, tend go up very quickly, but the rents don't correspondingly go up as much. CM3 is performing slightly better, with current average yields of 3%. Before you all start buying in Northern and Eastern villages (CM3), the yields are high because of higher value properties to rent at the £2500 to £3500 per month region, thus pushing the averages artificially high. My long term records show yields always tends to be similar (around 2.3% to 2.6%) in CM3 to CM4's.