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What Style of Buy to Let Might Give Best Capital Gain in Dundee

What Style of Buy to Let Might Give Best Capital Gain in Dundee

I was discussing recent letting activity with a colleague the other day and we came to the conclusion that at the moment and in the last few months’ houses seem to be letting easier than flats and at a premium. 

Now I wouldn’t read too much into this as it is based on data over a relatively short period of time, however it did bring to mind an article I wrote for the blog about 18 months ago regarding the difference in return between semi & detached houses.

As a result I thought I would revisit the subject, but widen it to include flats and the latest data post the Brexit vote etc, hence the figures in the table below:

 

Type of Property Average Property Value % Change Over Last 5 Years
   
Semi 22.95%
Detached 22.66%
Terraced 20.53%
Flat 11.00%
   

 

Now this analysis is very general, I did dig deeper as part of the research and broke it down between post codes DD1 to DD6, but frankly the differences weren’t really significant enough to include so I’ve used the averages of Dundee as a whole.

Now these are averages and there will obviously be variation based on number of bedrooms, specific location, condition etc. The idea is just to provide a rough guide to previous performance of house values and maybe how they could perform in the future. 

Now looking at this data one would rightly assume that the best ‘capital appreciation’ would be in houses and I wouldn’t disagree with that, as regular readers will know I have been banging on about the opportunities to be found in small, family sized houses for some time. 

However, this doesn’t paint the whole picture. There is of course the rental return and how much money have you got available to invest. 

Right now the average purchase price (according to Zoopla) of a one bed flat in Dundee is just under £60,500 whereas the same for a small family semi, say three beds is £170,000.

Again taking an average as there is obviously going to be an enormous difference between the rental/sale value of say a one bed flat in Bellefield Avenue in the West End and the same property in Dunbar Park.

What the averages give us is that the one bed flat (all other factors being equal) gives us a gross rental yield of 7% whereas the three bed semi a yield of only 4.69%.

All I am trying to point out is two things, firstly, whether your investing an unexpected windfall or taking out a mortgage to build a portfolio for the longer term there are deals to be done and healthy returns to be made.

However and in my opinion more importantly, please, please do your research or talk to someone who knows the market. In this day and age the data that is available online is staggering so there is no excuse for not knowing what you are getting into and when I say research I don’t mean chatting to some ‘geezer’ you met in the pub.

I’m always happy to chat about property, either directly or by email so feel free to drop me a line, there are few guarantees in this life but what I can promise you is my honest, unvarnished opinion. 

nick.horan@belvoirlettings.com

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