It was interesting to have a chat with a local landlord who lives in Ashley Park last week.
We got chatting about his buy to let property in the Vicarage Fields Estate, but it got even more interesting when we discussed the differences between the various areas of Walton and how the two areas (of Ashley Park where he lived and Vicarage Fields compared), when it came to buy to let investment.
I did a comparison between the two areas and was surprised to find that the property market in the Vicarage Fields Estate area had outperformed the Ashley Park development market by 98%!
The average price of an apartment on the Vicarage Fields Estate is £178,500.
When you consider the rents that are achieved in the Vicarage Fields Estate are an average of £795 pcm, this gives us a yield of 5.34% per year.
So is the Vicarage Fields Estate the best investment? Well, in the Ashley Park area where the the average value of a property is £2,387,500 and the average rent for in the area is £5,360 pcm, giving a much lower yield of 2.69% per year, thus making the yield/ return on the Vicarage Fields estate 98% proportionately more than property in Ashley Park development.
So surely Vicarage Fields 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 14 years, property values of apartments have only risen on average by 120.3% in the Vicarage Fields Estate (rising from £81,000 to the £178,500 mentioned above), which is very impressive considering there was the 2008 property crash.
However, average property values for properties on the Ashley Park development have risen on average by 232.7% in the same time frame.
Now of course, investing in high yielding properties in the Vicarage Fields area does present the landlord investor with dilemmas; such as the type of tenant one would attract, the low capital growth rate and the likely churn rate.
Most of my landlords prefer to trade a slightly lower yield in a slightly more up market property, because of the better capital growth and type of tenant the property attracts.
So, if you are considering investing in the Walton on Thames property market, do you want capital value or yield or both? 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 the High Street, (opposite the War Memorial) in Walton on Thames.