I had a conversation with a landlord who lives in Beauval Road and who took me up on the offer of an informal chat about the East Dulwich property market recently after he read our ‘East Dulwich Property Blog’.
We got talking about investing in East Dulwich property and how you could actually breakdown the performance of property in the area almost to road level. Investing in East Dulwich property is a balancing act between capital growth and the monthly yield you’ll attract.
Going for strong capital growth in London seems an obvious choice because of the potential to generate long term capital profit, especially with inflation eating away at our savings. However, rental yields on high capital growth properties tend to be lower meaning if you are taking a high percentage mortgage, the rent may not actually cover the mortgage payments.
It became really interesting when we compared his area of Beauval Road against The Dog Kennel Hill Estate, where he lived as a child in the 1950’s and 60’s.
The average value of a property in Beauval Road is £862,025 and an average rent in this Road is £1,939 per month (because a lot of the properties have been converted into flats now). This would give our landlord a yield of 2.69% per year, which is quite reasonable. Until you consider those apartments in The Dog Kennel Hill Estate, which sell for around £259,728 and let, depending upon condition for around £1,123 per month, a yield of 5.18% per year, which is a 92% proportionally higher yield.
However, like I said a few weeks ago, yields are not everything in property investment. Another is how the value of the property goes up in value over time. Better properties in better locations don’t have the best yields, but their property values tend to go up more dramatically over the long term.
The average value of property on The Dog Kennel Hill Estate in 2000 was £93,750 in 2000, a rise of 177%. So, one would expect Beauval Road property values to risen a lot more.
Well they have but by not much more, as average values in the Beauval Road area have only risen by 207.5% since 2000. However, percentages don’t tell the whole story. Whilst an average homeowner, if they sold their property today in the Westfield estate would make around £165,900 gain, a home owner in Beauval Road would, on average, have made and impressive £581,600 gain.
There probably isn’t many landlords that would buy a large property in the Beauval Road area to rent out also, and by the same token there are some landlords in the area that are achieving yields of nearer to 3%-4% – likely on the smaller one bed apartments. However, it’s just that looking at the East Dulwich property market in more depth enables me to give you the best advice and opinion to help you find the best investment property.
It is in our interest that you buy a property which will rent well, and for long periods of time. If you would like any advice on choosing properties as your investment, please come and see me at our office in The Parade on Dog Kennel Hill, in East Dulwich.