This question formed the basis of a lengthy and heated conversation (argument!) at the weekend with another estate agent and one of my friends who is also a local landlord owning several properties in the area that he rents out. Not going to tell you who won the day but I have now done some proper research and will not have to rely on gut feeling next time.
One measure of affordability in a town is the ratio between the average house price and the average salary. The lower the ratio, the more ‘affordable’ the property in that area.
Rightmove tells me that the average property price in Aylesbury is £215,422. The average salary is £31,107 giving a ratio of 1 to 6.9.
For comparison High Wycombe, values £255,615 and salaries £32,752 giving a ratio of 7.8.
Using the same formula I tried an area where property is much more expensive than Aylesbury but with salaries to match. Teddington average price £711,221 with salaries of £41,808 gives a ratio of 17.0!
So Aylesbury does look like good value when compared locally. Further the fact that nearby areas are less affordable with higher prices means that there is plenty of room for our sale prices to increase further…giving the investor a good shot at achieving strong rent with good prospects of capital growth, the ideal scenario.
If you want further details or to talk through your investment options please give me a call, pop in to our office or email me ian@mortimersaylesbury.co.uk
Tuesday, 28 October 2014
Monday, 22 September 2014
Why don’t people buy instead of renting in Aylesbury?
Quite often, when discussing the rental market, we talk about property and seem to forget the other party in the equation, the tenant. Without tenants, there is no demand for the rental property. The profile of the Aylesbury tenant has changed and continues to change. Although this is in part due to the credit crunch, job mobility and the raising of deposits, an increased number of people in their twenties are choosing to rent rather than buy and have done so, even when they were in a position to buy a property.
Since the credit crunch, rents have been good value for money for most tenants outside London. Few rents (outside London) have kept pace with inflation as they tend to track wage inflation. In 2008, the average wage according to Office of National Statistics in Aylesbury was £32,160. Latest figures for Aylesbury in 2014 show average salaries in the town have risen to £36,374, an increase of 13.1%. I was reading some research from the Bank of England which suggests with regards to inflation, goods and services that cost £100 in 2008 would cost £119 in 2014, making inflation 19% over those seven years.
Aylesbury tenants are paying less than both wage and goods inflation. Aylesbury rents are in fact still around 5.3% above the level being achieved in 2008 but the tenants are being paid 13.1% more. That is why we have seen a greater demand for Aylesbury rental properties with more and more people becoming tenants. So renting has since the credit crunch, on average, delivered good value for money for tenants and hence the healthy demand and lack of void periods for most property.
Overall, considering the recent rises in property prices over the last 12 months, we are still 1.53 % above the 2007 boom prices in Aylesbury. With reasonable rents, many would-be first time buyers in Aylesbury have been wise to remain in the private rental sector. Rents tend to move in line with wages as opposed to inflation and if something goes wrong with the property, inevitably landlords pick up the bill, so tenants aren’t hit with awful expenditure surprises as a normal homeowner would be. In addition, renting offers better mobility both from a location perspective, but also from a trading up or down perspective in terms of rent commitment which, in this tough job market, could be considered a wise move.
From the landlords point of view, the consequence of this steady/solid market throughout the Aylesbury area, with good tenant demand, decent long term capital growth (as mentioned in last week's article) and average yields between 4 and 6%, with home owners it used to be buy, sell, buy, sell as one rose up the property ladder.. Now it’s buy, hold, buy, hold.
If you would like to discuss my thoughts on the rental markets in Aylesbury, feel free to pop into our offices on Temple Street, or email me on ian@mortimersaylesbury.co.uk
Since the credit crunch, rents have been good value for money for most tenants outside London. Few rents (outside London) have kept pace with inflation as they tend to track wage inflation. In 2008, the average wage according to Office of National Statistics in Aylesbury was £32,160. Latest figures for Aylesbury in 2014 show average salaries in the town have risen to £36,374, an increase of 13.1%. I was reading some research from the Bank of England which suggests with regards to inflation, goods and services that cost £100 in 2008 would cost £119 in 2014, making inflation 19% over those seven years.
Aylesbury tenants are paying less than both wage and goods inflation. Aylesbury rents are in fact still around 5.3% above the level being achieved in 2008 but the tenants are being paid 13.1% more. That is why we have seen a greater demand for Aylesbury rental properties with more and more people becoming tenants. So renting has since the credit crunch, on average, delivered good value for money for tenants and hence the healthy demand and lack of void periods for most property.
Overall, considering the recent rises in property prices over the last 12 months, we are still 1.53 % above the 2007 boom prices in Aylesbury. With reasonable rents, many would-be first time buyers in Aylesbury have been wise to remain in the private rental sector. Rents tend to move in line with wages as opposed to inflation and if something goes wrong with the property, inevitably landlords pick up the bill, so tenants aren’t hit with awful expenditure surprises as a normal homeowner would be. In addition, renting offers better mobility both from a location perspective, but also from a trading up or down perspective in terms of rent commitment which, in this tough job market, could be considered a wise move.
From the landlords point of view, the consequence of this steady/solid market throughout the Aylesbury area, with good tenant demand, decent long term capital growth (as mentioned in last week's article) and average yields between 4 and 6%, with home owners it used to be buy, sell, buy, sell as one rose up the property ladder.. Now it’s buy, hold, buy, hold.
If you would like to discuss my thoughts on the rental markets in Aylesbury, feel free to pop into our offices on Temple Street, or email me on ian@mortimersaylesbury.co.uk
LANDLORD RETURNS ON FAIRFORD LEYS
In my previous Blog posting, I was discussing the difference between apartments and semi-detached houses in the Fairford Leys development on the South Western edge of Aylesbury. I talked about the effect that the lack of two bedroom houses coming on to the market was driving up the demand for apartments in the same area. Due to a lack of supply of two bedroom houses coming on to the market for sale, they have experienced some excessive short term price gains and landlords are considering buying apartments in Fairford Leys as an alternative investment. The question I set at the time was “What does this news have on rental returns?”
When a property increases in value over time, it is known as 'capital growth'. Capital growth, also known as capital appreciation, has been strong in recent times in Aylesbury, but the value of property does go up as well as down, and of course the local conditions surrounding your property have a big effect. Rental income is what the tenant pays you - hopefully this will grow over time too. If you divide the annual rent into the value (or purchase price) of the property, this is your yield, or annual return.
Looking at the capital growth of a property needs to be both a short and long-term decision, in my previous article, I discussed the short term gains however, looking back to 2002 the average two bedroom house in Fairford Leys has risen by 57.3% compared to the apartments that have only risen by 18.5% considering that inflation has been 41.9% over the same time frame, obviously twi bedroom houses have beaten the cost of living whilst the apartments have come nowhere near that figure. So in real terms they have dropped in value.
However, we also need to consider the annual yield. The average yield for a two bedroom apartment in Fairford Leys is presently 5.88% whilst for a two bedroom house it is 4.92%, making the apartment have a 19.5% proportionally higher yield.
One final consideration is that with apartments there are additional costs for ground rent, buildings insurance and the cleaning and maintenance of communal areas. This does reduce the yield, however, it does remove certain obligations and responsibilities away from the landlord, something that some landlords prefer.
It really comes down to what you really want from your property investment. Investing in property is a balance between capital growth and yield and each landlord sits differently on that see-saw. There are plenty of other areas in Aylesbury which also need serious consideration and therefore whether you are one of our own existing landlords , or a landlord with any other letting agent in Aylesbury please, feel free to pick up the phone and have a chat about what’s happening in the property market today.
When a property increases in value over time, it is known as 'capital growth'. Capital growth, also known as capital appreciation, has been strong in recent times in Aylesbury, but the value of property does go up as well as down, and of course the local conditions surrounding your property have a big effect. Rental income is what the tenant pays you - hopefully this will grow over time too. If you divide the annual rent into the value (or purchase price) of the property, this is your yield, or annual return.
Looking at the capital growth of a property needs to be both a short and long-term decision, in my previous article, I discussed the short term gains however, looking back to 2002 the average two bedroom house in Fairford Leys has risen by 57.3% compared to the apartments that have only risen by 18.5% considering that inflation has been 41.9% over the same time frame, obviously twi bedroom houses have beaten the cost of living whilst the apartments have come nowhere near that figure. So in real terms they have dropped in value.
However, we also need to consider the annual yield. The average yield for a two bedroom apartment in Fairford Leys is presently 5.88% whilst for a two bedroom house it is 4.92%, making the apartment have a 19.5% proportionally higher yield.
One final consideration is that with apartments there are additional costs for ground rent, buildings insurance and the cleaning and maintenance of communal areas. This does reduce the yield, however, it does remove certain obligations and responsibilities away from the landlord, something that some landlords prefer.
It really comes down to what you really want from your property investment. Investing in property is a balance between capital growth and yield and each landlord sits differently on that see-saw. There are plenty of other areas in Aylesbury which also need serious consideration and therefore whether you are one of our own existing landlords , or a landlord with any other letting agent in Aylesbury please, feel free to pick up the phone and have a chat about what’s happening in the property market today.
Friday, 22 August 2014
Should I buy flats or houses on Fairford Leys?
I was talking to an existing landlord earlier this week and he asked the above question. I gave my normal response- two bedroom houses on Fairford Leys give you the best of all worlds-minimum void periods, good rental return, sensible capital growth prospects, easy to resell when the time comes.
However I thought it was about time, as the market has moved so much this year, to check that my advice is still sound.
Taking a three month period in 2011 the average two bedroom house completion value was around £182,000. In the first three months of this year it was £190,000, growth of 4.4%.
Two bedroom flats in 2011 were £122,000 on average and in the first three months of this year the completion prices had only increased slightly to £125,000, 2.4%.
So if you have bought a house you have done marginally better than if you had bought a flat in % terms but when you translate in to pounds it sounds a little different... a return of £3,000 against a return of £8,000!
However if you look at the current market situation the picture is different again. Instead of using completion data look at the sales agreed and property available. Completion data available for the first quarter of this year will likely be for property sold around the last quarter of 2013 and although the market was picking up a little pace it had not heated to the levels we have seen in 2014.
As at 22/08/2014 Rightmove shows just two two bedroom houses available £207,500 and £199,950, while there are 19 sold subject to contract. There are twenty one two bedroom flats available with an average asking price of £157,000 and twelve indicated as being sold subject to contract.
If we assume from this that the houses are now averaging say £195,000 that is another £5,000 of growth-great news. But the growth for flats this year has been substantial with the lack of houses to feed demand many investors have turned to flats and they have been driven up in price. If we assume that with an average current asking price of £157,00 the average selling price historically this year has been at £145,000 that is a whopping £20,000 growth this year.
So do I need to change my advice? I still think the two bedroom houses on Fairford Leys tick all the boxes for a long term landlord but there are going to be short term gains to be had when supply is so thin on the ground as we have seen this year.
What impact do the rental returns have on this decision? Have they increased on both houses and flats? My next post will cover these questions...if you have other questions please email me ian@mortimersaylesbury.co.uk
However I thought it was about time, as the market has moved so much this year, to check that my advice is still sound.
Taking a three month period in 2011 the average two bedroom house completion value was around £182,000. In the first three months of this year it was £190,000, growth of 4.4%.
Two bedroom flats in 2011 were £122,000 on average and in the first three months of this year the completion prices had only increased slightly to £125,000, 2.4%.
So if you have bought a house you have done marginally better than if you had bought a flat in % terms but when you translate in to pounds it sounds a little different... a return of £3,000 against a return of £8,000!
However if you look at the current market situation the picture is different again. Instead of using completion data look at the sales agreed and property available. Completion data available for the first quarter of this year will likely be for property sold around the last quarter of 2013 and although the market was picking up a little pace it had not heated to the levels we have seen in 2014.
As at 22/08/2014 Rightmove shows just two two bedroom houses available £207,500 and £199,950, while there are 19 sold subject to contract. There are twenty one two bedroom flats available with an average asking price of £157,000 and twelve indicated as being sold subject to contract.
If we assume from this that the houses are now averaging say £195,000 that is another £5,000 of growth-great news. But the growth for flats this year has been substantial with the lack of houses to feed demand many investors have turned to flats and they have been driven up in price. If we assume that with an average current asking price of £157,00 the average selling price historically this year has been at £145,000 that is a whopping £20,000 growth this year.
So do I need to change my advice? I still think the two bedroom houses on Fairford Leys tick all the boxes for a long term landlord but there are going to be short term gains to be had when supply is so thin on the ground as we have seen this year.
What impact do the rental returns have on this decision? Have they increased on both houses and flats? My next post will cover these questions...if you have other questions please email me ian@mortimersaylesbury.co.uk
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| Nala at home for the first time, just washed and fed. |
Tuesday, 19 August 2014
So where do we go from here? A view on the Aylesbury property market.
The question I get asked most frequently by landlords, friends and colleagues alike is “what’s the market doing?'
Often this question is asked idly as a conversation starter but most recently it is asked with earnest and the poser of the question really does want an answer and right now is probably the toughest time to answer the question for years!
We have seen massive rental income growth through the last couple of years, great for landlords. Sale prices have remained fairly steady with some sensible growth. But at the start of this year it has all changed.
Sale prices have increased substantially for both flats and houses. As yet there is no sign of the strong prices for sale falling back, there may yet be more room for prices to increase.
Rents however have eased off from the giddy heights recently achieved although strong prices on the right property are still not a problem.
So where does that leave you and me as investors/landlords?
I guess this depends on why you are buying property. If it is for capital growth the potential for this is much reduced until we see the next surge in prices.
When will that be? Well the current increases may continue so your guess is likely to be as good as mine, but there are new mortgage regulations creating a drag on the market reducing mortgage availability. There is an election looming next year and in my experience this usually holds prices back with a surge following the result.....if it is popular!
So there are likely to be good buys later in the year and at the beginning of next for those who have capital growth as their main concern.
However if monthly returns are your thing there are still good buys out there today.
So whatever your goal, as always, it pays to buy well and to buy the right product. Two bedroom houses still give you the best of both worlds...sensible capital growth prospects and a good monthly return on your investment.
If you are coming to the market to buy for the first time or have not bought in this area before please feel able to contact me.
01296 398555
ian@mortimersaylesbury.co.uk
Often this question is asked idly as a conversation starter but most recently it is asked with earnest and the poser of the question really does want an answer and right now is probably the toughest time to answer the question for years!
We have seen massive rental income growth through the last couple of years, great for landlords. Sale prices have remained fairly steady with some sensible growth. But at the start of this year it has all changed.
Sale prices have increased substantially for both flats and houses. As yet there is no sign of the strong prices for sale falling back, there may yet be more room for prices to increase.
Rents however have eased off from the giddy heights recently achieved although strong prices on the right property are still not a problem.
So where does that leave you and me as investors/landlords?
I guess this depends on why you are buying property. If it is for capital growth the potential for this is much reduced until we see the next surge in prices.
When will that be? Well the current increases may continue so your guess is likely to be as good as mine, but there are new mortgage regulations creating a drag on the market reducing mortgage availability. There is an election looming next year and in my experience this usually holds prices back with a surge following the result.....if it is popular!
So there are likely to be good buys later in the year and at the beginning of next for those who have capital growth as their main concern.
However if monthly returns are your thing there are still good buys out there today.
So whatever your goal, as always, it pays to buy well and to buy the right product. Two bedroom houses still give you the best of both worlds...sensible capital growth prospects and a good monthly return on your investment.
If you are coming to the market to buy for the first time or have not bought in this area before please feel able to contact me.
01296 398555
ian@mortimersaylesbury.co.uk
Nala on best behaviour before arriving at her new home. Fluffy, adorable husky.
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The combined value of Aylesbury’s housing market has fallen by £1,158,600 in the last 6 months, meaning the average value of an Aylesbury ...
