For those that read last week’s article (yield vs Capital growth), I promised that I would look at the Thanet property market and compare its Rental yield and capital growth for the buy to let investor. For those new to the buy to let investment game, the yield is the yearly rent from a property, reflected as a percentage of the value of the property (one might consider it in the same light as the interest rate from your savings account) whilst the ‘Capital growth’ is the amount the property goes up in value each year, reflected as a percentage of the value of the property. For today’s purpose I will concentrate on Ramsgate.
The average value of a property before the crash of 2007 in Ramsgate was around £285,000. The year after, in the 2008 slump, prices dropped to £250,000. Considering values today are around £270,000, if you bought in Ramsgate in 2008, values would have increased by 8%. When you consider values in Herne Bay since the 2008 slump are only 4.0% higher and in Deal are 6.0% higher, this is an excellent increase.
However, property investment cannot be judged over short time frames and most certainly not by averages. I often, when looking at a market for a landlord, like to take a longer look at the market, and consider 10 to 15 years a more suitable time frame for capital growth. After doing my research, a lovely characterful terrace house set over three floors along Boundary road, sold for £47,000 in January 1999. It sold again in November last year for £115,000. Now the average property value increase for Ramsgate and the immediate villages, in that time frame was 48.6% whilst this property along boundary road saw capital growth of nearer 60%. Put the same £47,000 in the stock market in 1999, and in 2013, it would have risen to £55,880, a not so impressive rise of only 2.3%.
That’s not to say everything in Ramsgate turns to gold. There are good properties, which have dropped in value. A very pretty 4 bed detached house sold in 2006 for £295,000. It sold again last year and if it had followed the Ramsgate averages, it should have sold for nearer £320,000. However, some lucky person purchased it for £250,000.
As we don’t sell property, I can always give my landlords and landlords who aren’t with me but want a second opinion and even people who are thinking of becoming landlords, my unbiased opinion on what to buy and what not to buy. I pride myself on knowing the market intimately, so I can give some great advice and opinion. It might not be what you want to hear but, I can assure you, it is what you need to hear. If you buy right, you will build yourself some capital growth for the future. If you want to chat about property investment in the area, be it Ramsgate, Margate, Broadstairs or anywhere around Thanet and the surrounding villages. My office is 200 Northdown road in Cliftonville, Margate. I look forward to seeing you soon.
