Over the last five years, house prices in Bournemouth have risen by 24.5%, and we’ve seen subtle changes to the property market that suggest the buying patterns of landlords have changed slightly. So what do they know that you don’t? And where's the smart money going?
Recently published buy-to-let (BTL) lending statistics tell an interesting story. Twelve months ago, 6,700 BTL mortgages were granted in one month for a total of £900m, meaning the average BTL mortgage was £134,200. Looking at last month’s figures, the lending figures were down, but not by the amount you might imagine given the uncertainty that Brexit is causing.
Last month, just over 6,100 new buy-to-let mortgages were granted for a total sum of £800m, meaning the average landlord mortgage was a respectable £131,100. Yet, when I looked back to the boom year of the 2014 property market, in the corresponding same month, only £1,030 million was borrowed on 8,300 buy-to-let properties, meaning the average buy-to-let mortgage was £124,100. So in spite of Brexit, very little has changed.
Looking closer to home, landlords in Bournemouth tell us they are feeling positive – and the market picture backs that up. Whether they’re seasoned professional Bournemouth landlords or first-timers, landlords have seen that overall, the Bournemouth property market is doing pretty well, with medium-term rents and property values rising.
As is quite clear from the mortgage figures, landlords are still buying.
Which type of buy-to-let property should I invest in?
As a landlord, you can make money from property through both rent (expressed as a yield when compared to the value of the property) and how the actual value of the home itself changes.
Landlords who invested in property five years ago in Bournemouth have seen local property values rise by 24.5% overall – but the figures for each type of property, based on value per square metre, show a subtle but interesting difference:
They all look to have similar percentage uplifts, but the slight variations can equate to thousands of pounds in monetary terms.
The figures suggest that semis and terraced houses have performed the best over the last five years – although like the £/Sq.M figures, it’s important to remember that these are just averages, and many individual factors can affect each property.
When considering a property investment, it’s also worth remembering that whilst Bournemouth apartments haven’t been the best performers in terms of capital growth, they do tend to generate a slightly better yield than houses, probably because several sharers can afford to pay more than a single family. Houses tend to appreciate in value more rapidly and may well be easier to sell, simply because there are fewer being built.
What does this mean for the Bournemouth property market?
The bigger picture here, though, is this – irrespective of what is happening in the world, people in Bournemouth still need a roof over their heads, and we as a country haven’t built enough homes to keep up with the demand since the late 1980s.
This means that even if we have a short term wobble in 2019 when it comes to property values, in the medium-term, demand will always outstrip supply and prices and rents will increase. Because I doubt the local authority, let alone Westminster, have the billions of pounds required to build the 100,000 council houses a year nationally for the next decade needed to fix this issue.
Interestingly, history tells us that it can be done. Housing associations and local authorities have built around 26,500 houses each year since 2010, and the Labour government had a lower average, building about 19,000 homes per year – yet in the 1960s, under both administrations, an average of 180,000 councils were built per year. But unless we see a return to the approach of fifty years ago, the only people who can fulfil the demand for accommodation in the medium term, as the population increases, are private landlords.
If you’re thinking of investing as a buy-to-let landlord, talk to the experts at Foxes. We have over 20 years’ experience in the Bournemouth property market, and can help with every aspect of buying, as well as managing your property and tenancies.
Simply call the Foxes Sales & Lettings team on 01202 299600 or email firstname.lastname@example.org for expert advice which is honest, accurate and informative.