We have mentioned in previous
articles the difference between Chelmsford and the surrounding towns, such
as Witham & Braintree, and they always gets a response from people asking me
lots of questions. This time, I wanted to highlight, why you should be looking
at buying a property to let in Chelmsford.
Many people in our part of Essex, over the last few years, have seen the buy to let market become all about nest egg investment. It has been fuelled by pitiful interest rates on building society savings and reflects the fact that building society savings accounts are paying half a per cent interest and pension returns are struggling to match expectations, turning more and more people into landlords to secure their future.
So what can you expect from your rental property investment? In the short term, rental yields are important, and in Chelmsford, the average annual yield is in the order of 4.5% per year. However, that is based on averages, and as most landlords in Chelmsford tend to buy starter home homes, apartments and terraced houses, the majority of which are achieving 5% to 6.4% per year depending on location and price in the City.
In the long term though, the question of capital growth is
as important, if not more important (because if you have great short term
yields, but the value of the property doesn't keep up with the rest of the
market, you will have an asset that in real terms is dropping). As we mentioned
in a previous article, average property values in Chelmsford currently stand at
£337,324. Property values in Chelmsford have risen by 19.4% in the last 5
years. On the other hand, property investment is a long term game, so I wanted
to share with you the research I did for a couple of Chelmsford landlords.
Roll the clock back 10 years to 2004/2005 when the average value of a property in Chelmsford was £177,700. 15 years back to 1999 makes really interesting reading, as the average Chelmsford property value was only £107,800. 30 years ago was around £50,000 and just for a bit of fun, we looked at 1974 at it was around £14,800!
So, not only can you get a better return on your investment with regards to the annual yield, compared to savings accounts at the moment, you also have got the additional capital growth with a property. Chelmsford is also still developing, with more properties and industry being built, this should make for a stable market, bringing new people to the area. This will also keep the demand for property high, which will maintain and grow the property prices further.