The Property Options’ Bristol Buy To Let Market Update for April 2017.
This update is by economist Chris Worthington, a speaker at our February PIM.
The latest UK Cities House Price Index published by Hometrack places Bristol at third place in the league table of 20 major cities in the UK for growth in house prices in the past year.
The year on year increase in Bristol was 7.3% with Manchester in first place at 8.8% and Birmingham in second place at 8.0%.
Good news for Buy to Let (BTL) investors in Bristol – but will this continue?
The league table also includes the increase in house for the last three months and this places Bristol around the middle of the table with a quarterly increase of 2.1%. Still good news for investors in that that house prices have continued to go up – but why has Bristol slipped down the 3 month ranking?
One possible explanation is that the cities with lower house prices have become more affordable. According to the Hometrack table, average house prices in Bristol are around £265,000 – whereas the house prices in cities with a high 3 month ranking have much lower house prices.
For instance, in Newcastle the average house price is £127,000 and the quarterly increase was 4.2%. The corresponding figures for Glasgow are £110,000 and 3.7%.
The overall picture is of the less prosperous cities catching up with Bristol, rather that Bristol falling behind.
Rental Rates of Return
The first consideration for BTL investors planning a new investment is usually the purchase price, as all investors will be working to their own budget. However in the long run it is important to consider the rental rate of return, that is the annual rent divided by the value of the property.
To investigate this further Chris turned to the useful website operated home.co.uk a property search company. This provides a wide range of statistics by area including average asking prices for houses and average rents, so it is possible to work out average rental yields. He used this method to work out rental yields for Bristol and nearby towns and cities.
Not surprisingly the rental for Bath (2.2%) was the lowest, because house prices are high in the Georgian City. Following this line of argument he had expected rental yields to be higher than Bristol in places with lower house prices – such as Keynsham and Yate.
However that was not the case, Bristol and Kingswood came out top with rental yields of around 3.6 % (Note 1). Chris attributes this to the strong demand for rented property in the main urban area, producing higher rents.
Note 1. This is an average figure and there will be wide variations between districts. It is also based on asking prices, which are likely to be higher than purchase prices.
We will all be discussing the latest position on the property market in Bristol and across the UK at our next PIM on 25 May 2017 at Holiday Inn, Bristol City Centre, 6-9 pm – when Del Brown and the Property Options’ team will be sharing their own inside views of the Bristol market and the best opportunities in our city.
We hope you will join us then.
For more info and to reserve your place Click Below