Following a discussion with a local landlord who lives in Parc Seymour , we got chatting about his two buy to let properties in Newport and how property in the Bettws Estate, where one of properties is, was so different to the Christchurch area where he owned the other. We got talking about the two properties in both areas and he wanted some advice on where to buy the next one. I did a comparison between the two and was surprised to find that the property market in the Bettws Estate area had outperformed the Christchurch development market by 89%!
The average price of a 3 bed house on the Bettws Estate is £72,300. When you consider the rents that are achieved in the Bettws Estate are an average of £497pm, this gives us a yield of 8.24% per year. So is the Bettws Estate the best investment? Well, in Christchurch, where the average value of a four bed detached property is £293,700 and the average rent for such a property is £1,063pm, giving a much lower yield of 4.34% per year, making the yield/ return on the Bettws estate 89% proportionally more than property in Christchurch, so surely Bettws is the best investment, isn’t it?
However, this is a great example of annual yield/return not being the only factor when choosing an investment property, as you should also consider how much the value of the property goes up in the long term. In the last 12 years, property values have only risen on average by 53.5% in the Bettws Estate (rising from £47,100 to the £72,300 mentioned above), which is very impressive considering there was the 2008 property crash. However, average property values in the Christchurch area have risen on average by 75.4% in the same time frame
So, if you are invested in Newport property, do you want capital value or yield? If you would like some advice about buying to let, be you a landlord with a portfolio or someone thinking of investing in the rental market, please come and see me at our office on Station Street in Newport.