I reminded them that one of the most important considerations you will have to make before investing is considering the balance between annual return and the capital growth of the property that you buy.
One of the most sought after places to live in is South Springfield in Chelmsford. There are 3408 households here with 81% of the properties in this area are owner occupied, yet only 275 of those households (or 8%) are privately rented. South Springfield has many different types of housing, but the very popular average 1970/80’s three bedroom semi-detached houses sell at around £257,186 (although there are some rather more expensive ones in certain parts of the area) and rents are on average £1099 per calendar month, which means you could be looking at a 5.1% yield in South Springfield.
Moulsham Lodge on the other hand is a slightly different story. Of the 2180 households in this area, (88%) are owner occupied and, only 135 are rental properties (6%). With this in mind, I carried out some further research and found that three bedroom semi-detached houses in Moulsham Lodge have outperformed those on South Springfield. This is because a three bedroom semi in Moulsham Lodge can be bought for around £250,500 and the achievable rents can be around £1116 (average) per calendar month. The yield which could be achieved from property in Moulsham Lodge is therefore around 5.3% per year, which is slightly more than in South Springfield.
This is an example of why when looking to invest in property, you should not just be looking at the best yield going, the capital growth should also be looked at. In other stories that we have posted in the last few months, some areas that offer the best yields actually perform worse when it comes to capital growth.
If you would like to discuss investing in Chelmsford, then please pop in and see me in our office on Duke Street
