People looking to purchase a property in London are increasingly turning to the Medway area in the face of high prices in the capital. I’m currently in the process of selling my property in central Rochester, which has been on the market now for around a month, and its staggering how much interest in purchasing it is generated from people living in London. But where in Medway are house prices most affordable?
The Office for National Statistics (ONS) has released an interactive map showing house prices in the area, as you can see below.
After you navigate your way through a sea of dark green representing high-priced London properties, you arrive at Medway; as you can plainly see, the area is a lot more affordable compared to London. It is my belief that Medway house prices are underpriced (there are numerous reasons why I believe this and I will expand on that in my next blog post – keep an eye out!)
Hempstead in Gillingham is the most expensive area of Medway, with an average house price of £330,000; that’s £100,000 above the Medway average. It is a very popular area with excellent transport links on the M2. Average rent for a three-bedroom home there is around £1,300 giving a yield of 4.69%, which in my opinion is not enough when you take into account the higher stamp duty level and mortgage interest changes.
Interestingly, Chatham and Rochester are priced rather far apart despite their proximity to one another. Luton Road and the surrounding area of Chatham bears an average price of £105,000, compared to houses near Rochester Airport that have an average price of £190,000. Luton Road in Chatham may sometimes get a bad rap, but it can work for investors: one of my landlords has a six-bed home of multiple occupancy (HMO) on the road which gives him a very good return.
For single lets, Rochester is extremely popular among working professionals. Average house prices across Rochester are £232,000 and with an average monthly rental income of £1,200 the gross rental yields are 6.2%. Depending on the area, much higher yields can be achieved.
Gillingham and Rainham properties situated near rail links also bring in good returns as single lets. Median house prices around Gillingham station are £110,000; as a single-let that should accrue around £900 per month, representing a 9.8% rental yield.
Investors looking for HMOs may find good returns buying property near Medway University Campus, which has three universities nearby, while also experiencing a current lack of student housing. The average price for a terraced house in that area is £162,000. With five bedrooms you could expect a monthly income of £2,166, producing a gross yield of 16%. This does not factor in renovation, planning and licensing costs to convert a property into a HMO though.
As I discussed last week, investing in Medway property is a shrewd move due to the national lack of housing and the unaffordable London market. If you want to talk to me about any property that you are thinking of purchasing as a buy-to-let, feel free to email me the details or send over a link, and I’ll be happy to talk it through with you. My email is firstname.lastname@example.org.