Happy New Year everyone! Wishing you all the best for 2016!
I was talking with friends the other day about where is a good spot for a solid investment in Medway property: Rochester, Chatham or Gillingham. After some investigation and crunching the numbers I was surprised to find that Gillingham has had 21.1% higher capital growth than Rochester over the past 12 months!
Average 2015 prices rose 10.29% in Gillingham by £21,840. Rochester didn’t perform so well with a £19,140 average growth of 8.12% and Chatham had a very similar growth of 8.03% rising in value by £16,452.
Gillingham was bullish in all types of properties apart from semi-detached, where average values did not increase as much as Rochester or Chatham. Detached properties in Gillingham rose £41,292 (12.62%) compared to Rochester’s detached properties, which went up by £21,271 (5.39%) and Chatham increased in value by £23,459 (6.96%). Similarly, Gillingham terraced properties rose 10.77% compared to Rochester’s 4.57%. However, Chatham’s terraced homes slightly outperformed Gillingham’s with a 11.36% increase in capital value.
Most interesting, is that Gillingham flats are soaring in value compared to Chatham and Rochester with an average value of £140,000. They rose 9.78% compared to Rochester’s 7.9% and Chatham’s 4.46%. Why is this so? Well Gillingham, Chatham and Rochester all had around 170 flat sales this year so supply is even. It could be the case then that there is a high demand for flats in Gillingham driven by a strong rental market of workers at Medway Hospital and other professionals attracted by good rail links into London.
So is it a good time to buy a Gillingham property? To answer that you will have to consider your investment goals. If you are after capital growth, consider whether the yields will cover the mortgage repayments and other costs – having too low a yearly rent can bring disaster! If you are after income then you should aim for properties that will rent easily and with the highest yields. Houses with high yields tend to rise in value more slowly so it is critical that you establish your priorities before choosing your investment. Achieving a balance between rising value and the best yields will bring the most solid and secure returns.
So are you considering buying a flat in Gillingham? An average two-bed flat in Gillingham should achieve a rent of £750 per month and would cost around £140,000 to purchase. This gives an average gross yield of 6.4%, which is a decent figure. Rochester and Chatham two-bedroom flats both average around £160,000 and have an average monthly rent of £850, so expect a virtually similar yield of 6.375%. The yield you attain will be different depending on the value of the property and will be lower for higher-priced flats (but with a higher expected capital appreciation).
If you are after a solid Medway property investment then Gillingham has had higher capital growth than Rochester and Chatham but with a similar yield. If the patterns continue to follow the past then Medway property is a good buy. As always, be aware of renovation and other expected costs that will follow from any buy to let investment.
If you have any questions or just wanted to have a chat about this blog article, pop me an email at firstname.lastname@example.org or call me on 07499 676762. Subscribe to this Medway property blog for the latest updates on Medway house prices and buy-to-let deals.
Have a great New Year from Medway Property News!