I was asked last week if postcodes make a difference to property values. Well in swanky West London, the difference between SW3 and SW10 can make values drop or rise by thousands, even millions of pounds. However, in our city of Chelmsford, we don’t have many Russian Oligarchs and Saudi Prince’s buying our properties. However, after doing some investigating, I did find out some interesting info.
The main postcode areas of the City are CM1 and CM2, with the most of villages to the North and East being CM3 and the villages to the South CM4. The postcode with the best performing housing market over the last 12 months has been the Southern villages in CM4, with average values rising by 10.6%. However, in a very close second and third come CM1 and CM2, with rises of 10.5% and 10.3% respectively in the same 12 month period with CM3 seeing more modest, yet still healthy rises of 8.6%. Look back at the areas over a longer period though and the differences aren’t so great. Over the last 5 years, values in the CM2 have risen by 21.9%, CM1 with a close second at 21.8% and CM3 21.3% and in a very respectful fourth, CM4 at 21.2%.
However, property values are only half the story when it comes to property investment. The average yields tell a slightly different story. CM1 has current average yields, based on what is on the market now at 4.1%, whilst CM2 has current average yields of 3.9%. As we go into the villages, CM4 conforms with the norm in that yields tend to be lower in the villages with an average yield of just 2%, as property values in villages, especially nice ones, tend go up very quickly, but the rents don’t correspondingly go up as much. … but, CM3 bucks that trend, with current average yields of 4.5%. Before you all start buying in Northern and Eastern villages (CM3), the yields are high because of an unusual glut of properties to rent at the £2500 to £3500 per month region, thus pushing the averages artificially high. My long term records show yields always tends to be slightly higher (around 2.3% to 2.6%) in CM3 than CM4’s, but not by the country mile that these figures suggest.
Therefore, if you are considering buying a property for investment in the near future, I am always happy to give you my considered opinion on which property to buy (or not as the case may be) to give you what you want from your investment (yield, capital growth or a bit of both). If you are a landlord, new or old, pop in and see us at our office’s on Duke Street for a chat or email me direct on [email protected]
