Millbrook property market ouperforms West End by 75%

I was recently asked whether West End or Millbrook would be a better location for investment

One of the most sought after places to live in is West End on the north eastern side of Southampton. There are 4,748 households here and an impressive 78% of the properties in West End are owner occupied, with only 543 households (or 11%) privately rented. West End has many different types of housing, but the very popular executive detached houses sell for on average £361,700 (although there are some rather more expensive ones in the other parts of West End) and rents are on average £1,360 per calendar month. Millbrook on the other hand is a different story altogether. Only 3,505 of the 6,474 Millbrook households are home owners (54%) and surprising only 1,180 rental properties (18.2%), the rest being made up of local authority housing.

With this in mind, I carried out some further research and found properties in Millbrook have outperformed those in the West End area. This is because a two bedroom apartment in Millbrook can be bought for around £95,600 and the achievable rents can be around £636 per calendar month. The yield which could be achieved from property in Millbrook is therefore around 7.9% per year. When we compare this to the possible 4.5% yield in West End, that yield/return is 75% greater in Millbrook than West End.

We must remember, however, that yield is not the sole consideration when investing in Buy to Let properties. Areas which offer good yields (i.e. Millbrook), normally suffer from poor capital growth (i.e. the properties in the area with good yields don’t go up in value as quick as other areas with lower yields.) Looking at average property values in West End back to 1999, the average property in West End has risen by 115% which is impressive, but there was an even bigger surprise; - all the evidence suggests average values in Millbrook have risen by an impressive 145% in the same time frame.

Nevertheless, even though the rise hasn’t been as great in West End compared to Millbrook, those of you who live in West End shouldn’t despair because in pure pound note terms you are still financially better off. Whilst the headline rate is higher in Millbrook, a person who bought an apartment in Millbrook in1999 would be on average £56,600 better off due to the 145% rise, whilst the 115% value increase for homeowners of detached houses in West End, mean they are actually £176,500 better off! It just goes to show you need to look beyond the statistics and evaluate each property on its own merits.