Southampton property .. how affordable is it?

I had an interesting chat with a gentleman, who lives in Rownhams, who dropped into our office whilst his partner was visiting at the South Hants Hospital. He is thinking of buying his first buy to let property and he wanted my opinion on the state of the market and if it was a good time to invest.
He was particularly worried that, with all the newspaper headlines of a booming housing market, there wouldn’t be any demand by tenants. 

One piece of advice I give to those looking to invest in property is a simple trick of the trade. You can judge the affordability of an area’s property market (and thus how much demand to buy there could be) by simply finding the ratio of the average property price to the average salary. The lower the ratio the more affordable property is. When we put this to the test, we found that, as a whole, Southampton currently has an average property value of around £232,200 with the average salary being £21,840. This is a ratio of 1 to 10.63 and, in fact, is slightly above the UK national average of 1 to 9.46, which means you have got to look hard to find value. 

However, the issue isn’t just affordability, it is also about raising the deposit. Even with the government schemes reducing the deposit to 5%, when you take into account the fees this cost would be in the region of £13,600, based on the average property value. Purchasers can afford the mortgage payments, but their inability to raise the money for the deposit is driving demand for rental property. Therefore, until 100% mortgages return, demand will continue to be very high for rental properties. It is also worth remembering that not everyone wants to buy a property. Renting gives people great flexibility. We currently have a significant pool of tenants who are eagerly looking for quality accommodation throughout the Southampton area. 

It’s important to buy the right type of property in the right location that will appeal to a wide tenant pool. If you are someone thinking of investing in the rental market, please contact me by phone or call into our office on London Road so we can help you explore the market fully.