A client living in Godalming has asked what my thoughts were on the town's suitability as a place to buy to let.
The Godalming property market has been slowing down a
little over the past quarter following a substantial rise in prices 12 month's ago. However the town is expected to benefit from a resurgence in house price growth in the forthcoming months, now that there is a new pro-property
Government in power.
The best advice we can give to those looking to invest in
property is our secret trick of the trade. You can judge the affordability of a
town 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 Godalming
currently has an average property value of around £537,518 with the average
salary being £30,118. This is a ratio of 1 to 17.85. Meanwhile in Guildford,
where the average property price is £509,223 the ratio of property values to
salary is 1 to 15.66, which suggests that property in Godalming is 14% less
affordable than in Guildford.
We also had a look at Farncombe and found the average salary there is £30,118 and the average property value is £291,448. This means that property
in Farncombe is 47% more affordable than in Guildford, with a much lower ratio of 1 to 8.3.
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| The Pepperpot, Godalming |
This could mean that now is an excellent time to invest in Farncombe. The affordability ratio is lower; and prices are starting to recover though a little bit later than in both Godalming and
Guildford.
A 3 bed semi-detached property in Farncombe can be purchased
for as little as £350,000 and let for £1,345 pcm to provide a gross yield of 4.6%.
In Godalming £350,000 may only afford you a 2 bed semi-detached property, unless you can locate a 3 bed townhouse to buy, as these do tend to sell for a little less than conventional 3 bed properties. The
rental for a typical 2 bed house in Godalming is around £1,195 pcm providing a
gross yield 13% lower than in Farncombe.
Guildford might however offer the best investment
opportunities. If we keep to the asking price of £350,000 there are several 3
bedroom properties that can be located in the Bellfields area, where one can achieve a rental of up
to £1,500 pcm. This will achieve a gross yield of 5.1% which is 10% higher than what is achievable in Farncombe.
To discuss how much your property is worth or
where you should make your next property investment in Guildford, call me for a
chat on 01483 320 207 or sign up to The Guildford Property Blog. I should love to hear from you.
Thanks for this post Richard. Where are you getting your salary data from? Also don't forget, a large number of people in these places commute into London, so the figures might look different if you compared them all to a London salary. And then also, average property size varies in each town, so wouldn't it be better to calculate it based on the average price of the same sized property in each town? Say, 2 bed terraced houses for example?
ReplyDeleteMark H
Good points Mark H
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