I have recently in response to a specific request, studied the facts and figures on one of the top property portals in the UK and the reading is quite interesting and definitely worth looking at if you are looking to buy in a semi-detached property in DH1 with a view to renting it out. I was recently asked by a potential investor, “What is the best semi-detached property to buy in the DH1 postcode, a two bed or a three bed?
Oh if only it was that simple! The first question I posed was “What is the most important factor that you are trying to achieve”? Capital growth or rental yield (GROI). They had actually not considered this aspect so we did some detailed analysis to help them and of course to help and advise other clients like yourself.
Since 2010 there have been over four hundred 3 bedroom semi-detached properties marketed on this portal with prices ranging from £340,000 down to £165,000 and this has resulted in 142 sales showing an average selling price in 2010 of £178,000 which has risen to £183,650, showing a capital growth of only 3% in 5 years. Average rents in 2015 at these properties was £681.41p showing a gross return on investment (GROI, sometimes referred to as yield), of 4%. Perhaps one of the most interesting points uncovered during this exercise was that there were 31 sales in 2010 in this group of properties versus 70 in 2015 showing that market is indeed beginning to move with an increase of 126% however the interest is not increasing the actual price for 3 bed semi’s as mentioned earlier the increase in sales price is only 3% since 2010. There has been a substantial increase in the numbers of properties but little in actual selling prices.
Looking at the market in two bed Semi-detached properties, since 2010 there has been just over 200 properties (around half the number of three bed semis) marketed on Rightmove. The average price in 2010 was £119,600 increasing to £ 134,050 in 2015 showing a capital growth of 12% four times that of the three bed semi’s over the same period. The average rent in 2015 for two bed semis was in giving a GROI of and in 2015 the average rent for a two bed property in DH1 was £511.67 showing a gross return on investment of 5%. Again the rate of sale has increased from 2010 to 2015 by 70% reinforcing my earlier comment that the market is distinctly more buoyant in 2015 but the added activity has not had a huge influence on price although significantly more in the 2 bed semi sector
In conclusion I believe the figures speak for themselves and the two bed semis definitely win in both terms of capital growth over their 3 bed rivals. If this was a question you were considering then I hope I have answered it comprehensively for you.
If you would like to discuss investing in the Durham property market or require any advice, help or assistance with the lettings, or management of your existing rental property or portfolio, please feel free to call me at my Durham Office on 0191 212 6970 or e-mail me on firstname.lastname@example.org