Erith Housing Estate outperforms Bexley Park Development by over 60%

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I recently had to advise one of our  Landlords who was considering investing in more buy to let properties, but was unsure about whether he should go for an investment that produced a better yield or capital growth. This is one of the most important considerations that you will make before investing; the balance between annual return/yield and the annual value increase/capital growth.

He had been considering the Bexley Park development, which was built around 2002, and is perceived to be nice development to live in. I researched into Pinewood Place in Bexley Park. The average two bedroom flat there sells at around £225,000, with rental returns of around £1,000 per calendar month. I then looked at similar sized two bedroom flats on Frobisher Road in Erith which, when looking at yields, have outperformed those on Pinewood Place. This is because a two bedroom flat on Frobisher Road can be bought for around £130,000 and the achievable rents can be around £850 per calendar month.

The yield which could be achieved from the property I considered on Frobisher Road is around 7.8% per year. Compared to the possible 5.3% yield of the property on Pinewood Place, it is 47% higher.

What about capital growth? Now this is the bit that surprised me. The average price of a two bedroom flat on Pinewood Place in 2004 was £189,700, meaning that the value has increased by 18.6% in the last 10 years, which is pretty much in line with the National average. The average value of a two bedroom flat on Frobisher Road in 2004 was £100,060, which has since risen by 30% in the same 10 years; making capital growth 61.3% higher on Frobisher Road over that period.

However, as I discussed in my last article - ‘Monopoly in Bexley Borough… How would you play?' - with the Frobisher Road development, there is the risk of having slightly longer void periods (which, with the current high level of demand for rental properties, is likely to be minimal) or a more varied quality of tenant.

If you would like more information on investing in the Bexley Borough property market, please call me or visit our offices.


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