Wednesday, 17 December 2014
Canterbury vs Rochester property values – which City has performed the best?
One topic that I am always being asked about, both by existing landlords and new ones, is how one city’s property values have performed against another. When purchasing a buy-to-let property, there are two ways landlords make money through property letting - capital growth and rental income growth.
When a property increases in value over time, it is known as 'capital growth'. Capital growth, also known as capital appreciation, has been strong in recent times in both Rochester and Canterbury, but the value of property does go up as well as down, and of course the local conditions surrounding your property have a big effect. Rental income is what the tenant pays you - hopefully this will grow over time too. If you divide the annual rent into the value (or purchase price) of the property, this is your yield, or annual return.
A landlord of ours from Sittingbourne, who has a number of properties in both Canterbury and Rochester, asked me a few weeks ago about the difference between Canterbury and Rochester housing markets. I was quite surprised with my findings and wanted to share them with you.
The average property price in Canterbury is currently £296,300. In the last 3 months property values in Canterbury, according to my calculations, have risen by just over 3.3% which starts to claw back the losses we experienced in the latter half of 2012 when values dipped by nearly 0.9%. That doesn’t sound a lot, but roll the clock back a few years and in 2009 values dropped 16.8% from the property values being achieved the year before. However, irrespective of the roller coaster prices we have seen in the City, they are still 22.2% higher than the 2009 slump (before you get the party hats on, we are only 0.4% higher than the 2007 peak!).
Rochester, has a slightly different story. Whilst in Canterbury, prices are 0.4% higher than the 2007 peak, Rochester’s property values are 1.1% lower from those 2007 peak prices. However, Rochester property values over the last 12 months have risen more than Canterbury’s, in fact 36% proportionally more year on year compared to our own city. Therefore, Rochester must be the better bet?
Well, not necessarily. The most important consideration when investing in property is to look at the medium to long-term. Since 2005 an average property in Rochester has risen from £202,900 to £228,700, a rise of £25,800 or 12.7%. However, in Canterbury the average property has risen from £255,800 to £296,300 a rise of £40,500 or 15.8%.
Each Canterbury (and Rochester) landlord will have different needs and requirements in his or her property investment. We are able to give an objective and unbiased opinion on what (and what doesn't) make a good property investment. Knowing what has happened to values in different cities, enables us to spot any trends or opportunities for buy to let landlords. If you would like to discuss my thoughts on the rental markets, feel free to pop through the door of our offices Watling Street or send me an email to email@example.com