Following on from my last article in the Plymouth Property Paper, I had an interesting chat with a chap over the phone. He is looking at his first buy to let property and he wanted my opinion on the state of the market and if it was a good time to invest.
He was particularly worried that with all the newspaper
headlines of a booming housing market, there wouldn’t be any demand by tenants.
One of the best pieces of advice I can give to those looking to invest in
property is a simple trick of the trade. You can judge the affordability of an
area’s property market (and thus how much demand there could be) by simply
finding the ratio of the average property price to the average salary. The
lower the ratio, the more affordable property is.
When we put this to the test, we found that Plymstock
currently has an average property value of £234,100 with the average salary
being £23,470. This is a ratio of 1 to 10. Meanwhile in Plympton, the ratio of
property values to salary is 1 to 8.2. Both these ratios are very fair,
comparing with other parts of the UK. The UK average Is 1 to 9.4 However
the issue is not affordability, it is the raising of the 5% deposit, which when
you take into accounts fees, will be in the region of £17,000.
Tenants inability to raise that sort of money for the
deposit is driving demand for rental property. If you would like some advice
about buying to let, be you a landlord with a portfolio or someone looking for
their first buy to let property, please come and see me in my office or give me
a call.
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