For the buy-to-let investor the yield or the amount of rent received as a percentage of the capital invested in the property is the all-important statistic to focus on. However, we cannot ignore capital growth which is the ‘icing on the cake’ especially as high yields are sometimes hard to achieve.
I was scanning through the latest price paid data published by the Land Registry when a client popped into the office and asked the question which parts of central Somerset have seen the greatest capital growth in recent years?
Looking back over the last 10 years, the area that stands out overall is Frome where the price paid for property is now 25.88% higher than it was 10 years ago. It is not surprising when you consider Frome was not so long ago voted one of the best towns in the UK to live, according to the Sunday Times.
There has always been an undercurrent of resilience and progression in Frome – vintage shops before they became the trend, a green movement, a vibrant arts scene. But it is increasingly surpassing itself. Not only does Frome have the market, which is to the west country what Brick Lane is to London, it has a booming cafe and food culture, pubs have been reopening, independent shops arrive and stay and what were once crumbling old beautiful buildings are now creative arts hubs. Featured recently on Countryfile, Frome really could become the market town of the future.
Of particular note in Frome is the capital growth of flats that have risen nearly 40% in 10 years while terraced properties have also fared well rising 35% over the same period.
Heading West to Street property prices have done well here too where buyers today pay over 20% more for property than they did 10 years ago. Of particular note are detached properties that are now selling on average for 28.4% more than they did 10 years ago while terraced properties now sell for 26.12% more over the same period. Street has seen many changes in the last 10 years and as well as being the home of C&J Clark International and Millfield School is a vibrant and fast-growing village.
The Best of the Rest
Elsewhere, terraced properties in Wells are now 24.14% more expensive than they were 10 years ago while detached properties in Glastonbury have risen over 23% in the same period.
Whilst my analysis is limited to averages and past performance is no guide to future performance it does give a general indication of what areas and property types may be on the up in terms of capital growth.
A Look at Postcodes
A more detailed and meaningful analysis of the Land Registry data is limited by the volume of transactions recorded but a look at postal sectors provides further insight to those areas with the highest capital growth:
- BA2 7 – Farleigh Hungerford, Woolverton and Norton St Philip areas of Bath – rise of 95.77% in 10 years
- BA11 5 – Ellworthy Court, New Road, Southfields in Frome – risen 56.78% in 10 years
- BA6 8 – Baltonsborough, Butleigh and in Glastonbury the areas South of the A361 and East of Wells Road have seen a rise in average price of 36.95% in 10 years
Property experts will tell you that the growth prospects of a property can vary by property type and even what end of a street the property is on so local expertise is vital when choosing an investment property.
About Tom Morgan
Founder of Jungle Property the multi award-winning letting agent based in Glastonbury, Somerset. I am passionate about property and Glastonbury and about providing the very best advice to anyone who wants the best return on a buy-to-let property investment. For an open and brutally honest opinion on anything in the Glastonbury property market please contact me via tom.morgan@jungleproperty.co.uk
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