Friday, 29 January 2016

Headingley vs Bradford – Clash of the Property Market Titans

Many landlords have been asking me my thoughts on the Headingley property market recently, and in particular, what is happening to property values. My calculations show property values in Headingley quite interestingly grew in the month of September by 0.1%. When one looks at the annual growth, Headingley values are 3.8% higher (when comparing Sept 14 to Sept 15).  However, there are signs that the fundamental growth of property values in Headingley has now peaked, despite those average property values being below levels recorded in 2007 (just before the 2008 crash).

Even though prices are higher this month, this impressive rise of Headingley property values masks the underlying truth in what is really happening to local property values in the Suburb. Throughout 2015, property values have been yo-yo like on a month by month basis, being quite volatile in nature.  For example,

 ·          September 2015                   0.1% rise
·         August 2015                        1.0% rise
·         July 2015                             1.3% rise
·         June 2015                            0.9% rise
·         May 2015                            0.6% rise
·         April 2015                           0.1% rise
  ·         March 2015                         0.2% drop

This is in part due to seasonal factors, as well as mortgage approvals increasing over June and July and then falling by over 15% in August, according to the Council of Mortgage Lenders (CML).

The outlook for the Headingley property market remains positive against the foundations of low mortgage rates and growing consumer confidence. However, I do have to question the recent CML mortgage data and whether that raises issues over whether the rate of growth since the Tory’s were re-elected in the early summer can continue? However, on a positive note, Headingley property values are still running ahead of salaries and average property values are 9.2% below the levels recorded in 2007.

Talking to fellow property professionals in the suburb, demand for property has been showing signs of moderating in the final few months of 2015. You see, it is really important not to read too much into one month’s (September’s) headline figures.

Readers might be interested to note that before the 2008 property crash, all the UK region’s housing markets tended to move up and down in tandem like the Headingley Synchronised Swimming team at the Leeds Beckett University Swimming Pool!  Since then though, the Greater London property market took off like a rocket in 2009/10, whilst the rest of the UK only really started to grow in 2012/13, and even then that growth was a lot more modest than the Capital’s.  Looking closer to home, it can even be different in neighbouring towns, areas and cities, so whilst Headingley property values are 3.8% higher than a year ago (as mentioned above), Bradford property values are 1.2% lower than a year ago.

I cannot stress enough the importance of doing your homework.  One source of information and advice is this property blog where I consider the best buy to let deals around at any one time in the suburb, irrespective of which agent it is on the market with so you're always able to get an unbiased opinion and viewpoint. 

Tuesday, 12 January 2016

Great 3 bed end terraced property with 10% yield

This three bed end terraced on Lumley Avenue in Burley is in a prime location which is ideal for professionals. It's only a short walk away from Burley Park train station and plenty of main bus routes going straight into Leeds City centre in around 10 minutes. 

From the looks of things, it's pretty much ready to go and rent out so you wouldn't need to spend a great deal other than a few cosmetic things. 

A property of this type in this area would usually rent out at around £370pcm per person which would give you a healthy return of 10% if you managed to get the property for around £135,000.

Friday, 8 January 2016

Values of Headingley Terraced Houses smash through the £200/sqft barrier

The Council of Mortgage Lenders (CML) latest snapshot of the buy to let mortgage market shows us that buy to let landlords haven’t been put off by the Chancellors announcements on the way buy to let’s are taxed.

Last month, the CML stated £1.4billion was borrowed by UK landlords to purchase 10,500 buy to let properties, up 26.5% from the same month in 2014, when only 8,300 properties were bought with a buy to let mortgage. Go back two years and the number of buy to let mortgages used for purchasing (again not re-mortgaging) is 36.4% higher! Even more interesting has been the fact that the average amount borrowed has risen as well. The average buy to let mortgage last month was £133,330, up from £128,480 a year ago.

In Headingley, I am speaking to more and more landlords, be they seasoned professional landlords or FTL’s (first time landlords), as they read reports that the Headingley rental market is doing reasonably well, with rents and property values rising.  Interestingly, one landlord recently asked how much he should be paying per square foot (more of that in a second).

The first thing you have to decide is whether you want great capital growth or great rental yield, as every knowledgeable landlord knows, you can’t have both. Over the last twenty years, property values in Headingley have risen by 134.98%, compared to Greater London’s 436.2%. This has proved that capital growth increases faster in the more expensive South, but your investment money doesn’t go very far, meaning there won’t be as much rental yield from a 1 bed flat in Chelsea (2% per year at best with a fair wind) as a 2 bed semi in Headingley. However, whilst the figure of 134.98% is an average for the area, certain areas of Headingley have seen capital growth much higher than that and others areas much worse (we have talked about those in previous articles).

If you recall in an earlier article, my research reveals that Headingley apartments tend to generate a better yield than houses, probably because several sharers can afford to pay more than a single family. But houses tend to appreciate in value more rapidly and may well be easier to sell, simply because there are fewer being built.

So what should you be buying in Headingley, and more importantly, how much?

  • The average apartments in the suburb are currently selling for approximately £210 per square foot.
  • Terraced houses in Headingley are currently obtaining, on average, £231,100 or £204 per square foot, 
  • An average semi in Headingley is selling for £246,800 (and achieving £211 per square foot). 

Now these are of course averages, but it gives you a good place to start from. In the coming weeks, I will look at rents being achieved on Headingley houses and apartments, and the yields that can be obtained, depending how many bedrooms there are.