Thursday, 12 February 2015

The Sherwood Estate’s property market outperforms Culverden’s by 85%

A couple from the Culverden area came to our offices to discuss potentially investing in property for Buy to Let in Royal Tunbridge Wells. I reminded them that one of the most important considerations you will have to make before investing is considering the balance between annual return/yield and the annual value increase/capital growth of the property that you buy.
One of the most sought after places to live in is Culverden on the North Western side of Royal Tunbridge Wells. There are 4,081 households here and an impressive 1,198 of those households in Culverden are owner occupied (representing 53.8%) and 1,565 of those households (or 38.3%) are privately rented. Culverden has many different types of housing, but the larger executive properties sell for around £850,000 to £860,000 and this type of property rents on average  for £2,050 per calendar month.

The Sherwood Estate on the other hand is a different story altogether yet very similar to Culverden. Of the 3,001 properties in the Sherwood Estate, 1,573 are privately owned which amounts to 52.4% home ownership.  However, there are only 245 privately rented houses (representing 8.2% of households)  because the majority of properties are in the social housing sector where 977 (or 32.6%) of households are rented from the Council.

With this in mind, I carried out some further research and found that the Sherwood Estate’s property market has outperformed the Culverden property market where those detached houses are. This is because a three bedroom mid terraced / semi-detached house on The Sherwood Estate have been selling on average recently for £218,700 and the achievable rents have been £950 per calendar month. The yield which could be achieved from property on The Sherwood Estate is therefore around 5.2% per year. When we compare this to the possible 2.8% per year yield on Culverden, that yield/return is 85% proportionally higher in The Sherwood Estate than Culverden.
We must remember however that yield is not the sole consideration when investing in Buy to Let properties. Areas which offer good yields (ie The Sherwood Estate), normally suffer from poor capital growth (ie the properties in the area with poor yields don’t up in value as quick as the posher areas.) Looking at average property values in Culverden back to 1999, the average property in Culverden has risen by 158% to today. However, average values in The Sherwood Estate have only risen by 121% in the same time frame.  It just goes to show, do you want yield or you want capital growth when in investing in buy to let property?
If you would like more information on investing in Royal Tunbridge Wells’s property market, please call me on  01892 54 38 56 or pop into our offices on Vale Road, Royal Tunbridge Wells.

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