I’m in a nostalgic mood today after walking my dogs up Maidstone Road Rochester and retracing the route that I used to plod along as a teenager up to Rochester Mathematical School (or ‘The Math’, as we know it). Being a local lad, I can’t help but admire the beautiful houses along Priestfields, not far from the school. Priestfields was given by King Ethelbert in AD 880 to the Dean and Chapter of Rochester, later being gifted to monks in 1077. The history of the road certainly rubs off onto its property as houses are very desirable here and command high prices.
That thought stuck in my mind during a meeting I had with an investor who doesn’t know much about the Medway property market beyond ‘Luton Road in Chatham is a bad area and Priestfields in Rochester is a good road’. This got me thinking, so I put his hypothesis to the test.
Luton Road, Chatham?
There are 141 houses on Priestfields and its connected roads, most of which are detached, compared to Luton Road’s 463 terraced properties and apartments. Average house prices on Priestfields currently stand at £580,000, and as a buy-to-let you could expect £2,000 per month in rent, bringing a yield of 4.14%. With this in mind, it was a surprise to find that properties on Luton Road are outperforming those on Priestfields. This is because the average price of a terraced house on Luton Road is £114,900 and with a two-bed terraced bringing in £725 per month, average yields are a lot higher at around 7.57%. When compared to the yield on Luton Rd this is 82% higher!
I would warn you, however, that having a high yield is not the only consideration, since you must also make sure your investments have good prospects for capital growth. Lower-yielding properties normally have higher capital growth and higher-yielding properties have slower growth. Taking into consideration this inverse relationship is crucial when deciding where to invest in Medway property.
Capital growth on Luton Road rose 31.4% over the past 10 years, a respectable figure in line with the rest of Medway. When looking at growth on Priestfields it is difficult to quantify as there has only been nine sales in the past five years. But from this data alone you can see the difference in capital appreciation.
One property which sold for £650,000 in August 2015 was bought for £343,500 13 years earlier which equates to 6.9% growth per year or 69% over ten years. The two in 2013 had 10.6% and 7% yearly growth respectively. Overall, Priestfields had an average of 81.7% capital growth over ten years, more than double the growth on Luton Road.
As always, you must seek a balance between capital growth and good rental yield when investing in Medway. You may think that you should go for high-yielding property in a place with great capital growth, but such places do not exist (or I do not know of them).
If you would like more information on investing in Medway, you can seek my advice. I am an expert in the Medway property market having grown up here. I don’t charge for my advice, and as I’m a lettings-only specialist I will be impartial in advising on the best places to invest — regardless of which estate agent is selling it. My phone number is 07944 726676 or you can email me at email@example.com.
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