Search This Blog

Saturday 27 June 2015

House yielding 6% for sale in Southampton, but is it worth it?

This 3 bed end of terrace house has just come on the market close to the General Hospital at £180k. It will appeal to investors as it is currently let at £895pcm, which equates to £10,740 p.a. and represents a Gross Yield of 6%. Indeed if the property had a spruce up it could let for £950pcm, but is it worth the asking price?

Well the adjacent mid terrace unit sold last November at £153k and a 3 bed semi further up the road sold for £145k earlier this year, of course conditions of properties vary but clearly this one is well above recent sales levels for no apparent reason. In our view a gross yield of 6.5% to 6.75% is appropriate for this type of let which would equate to a capital value of £160k to £165k which seems to be more realistic.

It pays to do your research on potential acquisitions. Currently in Southampton sales agents are having to compete hard for stock and vendor’s expectations can be strong which can result in higher asking prices. But do your homework and if you feel the price is out of line with the market, wait a bit as the price may be reduced as the vendor gets more realistic. If you would like an independent view on any property you are considering buying in Southampton please give me a call and we can chat it through

House prices rise 4.6% year on year says Land Registry

The latest house price data from the Land Registry shows that house prices in England and Wales have increased by 4.6 percent in the year to May 2015. According to the Land Registry the price of an average house in May was £179,696.

On a monthly basis however house prices remained flat across England and Wales, but in London they rose by 0.7 Percent over the month and by 9.1 percent in the year to May.

House prices in Wales did not fare so well with prices decreasing by 1.7 percent in May and going down in the year to May by 0.6 percent. Although the South West of England as well as Yorkshire and the Humber both saw a monthly fall of 0.6 percent, year on year prices went up in those regions by 3.6 percent and 1.1 percent respectively.

Looking at the prices of different property types over the year, detached houses saw the biggest increase of 5.2 percent, followed by semi-detached houses increasing by 4.7 percent, then terraced at 4.5 percent and flats/maisonettes going up by 4 percent.

On a more local basis Reading had the greatest annual price increase in May of 13.3 percent with Middlesborough seeing the largest fall at -7.2 percent. Stockton-on-Tees had the largest monthly increase in May of 5.8 percent and Halton with -2.8 percent saw the largest fall.

The house price graph below shows the latest available data of Nationwide, Halifax and the Land Registry HPI prices from before the credit crunch up to May 2015 and Rightmove asking prices to June 2015.