KINGSTON PROPERTY NEWS Property values rise by £1107 per week in Kingston Last week, a landlord who lives near the Coombe Hill Golf Course came into our office on Kingston Hill, opposite the hospital, to discuss the rising property values in Kingston. He owns a varied portfolio of rental properties, primarily in Kingston and Richmond with one in Wimbledon, so it was interesting to compare the increase in property values around the area. Over the last 12 months, in Kingston, average property value’s have risen from £503, 500 to £561,400 , a rise of just over £57,600, or £1,107 per week. When I looked at some of the surrounding areas, Richmond has had a slightly average increase in property values, at around £889 per week, whilst Wimbledon had a similar modest rise of an average increase of around £1,320 per week. It gets even more interesting when you consider these weekly figures only tell half the story. Whilst prices have gone up considerably in Wimbledon by £1,320 per week, as prices are so high, it only represents a growth of 10.8% year on year. As much as homeowners in Richmond can be very happy with their £889 per week, Richmond property owners have only seen their values increase by 5.4% year on year but our town of Kingston saw prices rise by an impressive 11.5% year on year. It just goes to show, one must look beyond the headlines. When considering this landlord’s buy to let portfolio, yields can be in the order of 3% to 4% per year, depending where you buy, so combine that with steady rental growth, excellent increases in capital values of the properties themselves and it could be a good time to invest in the property market in Kingston as property values start to rise. If you would like some advice about buying to let, be you a landlord with a portfolio or someone thinking of investing in the rental market for the first time, please come and see me at our office on Kingston Hill, opposite the hospital.

Issue 6. May 2014

Best of Kingston upon Thames EXPERT GUIDANCE TO HELP FIND THE BEST PROPERTY INVESTMENT IN KINGSTON … Cambridge Road Estate outperforms North Kingston River roads housing market by 105%

Kingston .. good time to buy property?

Following a discussion with a local landlord who lives in one of those nice properties backing on to the Park, off Park Road in Kingston, we got chatting about his two buy to let properties in Kingston and how property in the Cambridge Road estate, where one of properties is, (around Burritt Road and Eureka Rd area) was so different to the Victorian built houses in the North Kingston River roads area (on the left hand side off Richmond Road as you drive to Richmond – roads such as Lower Kings Rd, Eastbury and Chestnut Roads), where he owned the other. We got talking about the two properties in both areas and he wanted some advice on where to buy the next one. I did a comparison between the two and was surprised to find that the property market in the Cambridge Road Estate had outperformed the North Kingston River roads market by 105%!

Following last week’s article, I had an interesting chat with a chap who lives in Raynes Park who popped into offices whilst his better half was visiting at Kingston Hospital. He is thinking of buying his first buy to let property and he wanted my opinion on the state of the market and if it was a good time to invest.

The average price of an apartment on the Cambridge Road Estate is £156,700. When you consider the average rents that are achieved in the Cambridge Road Estate are £972 per month, this gives us a yield of 7.4% per year. However, yields in the North Kingston River roads are only 3.6% per year (because the average property on the River Roads is worth £769,400 and the average rent is £2,300 per month, making that 3.6% yield. (a 7.4% yield is 105% higher than 3.6% yield). This, however, is a great example of annual yield/return not being the only factor when choosing an investment property, as you should also consider how much the value of the property goes up in the long term. In the last 10 years, property values have only risen on average by 43% in the Cambridge Road Estate, which is very impressive. However, average property values on the North Kingston River roads development have risen on average by 84% in the same time frame. So, if you are investing in Kingston property, do you want capital value or yield. Either way, drop into my offices on Kingston Hill for a chat about property in Kingston.

He was particularly worried that with all the newspaper headlines of a booming housing market, there wouldn’t be any demand by tenants. One of the best pieces of advice I can give to those looking to invest in property is a simple trick of the trade. You can judge the affordability of an area’s property market (and thus how much demand there could be) by simply finding the ratio of the average property price to the average salary. The lower the ratio, the more affordable property is. When we put this to the test, we found that Kingston currently has an average property value of around £561,400 with the average salary being £35,100. This is a ratio of 1 to 15.9. Meanwhile in Barnes, the ratio of property values to salary is 1 to 27.4 and South Ken is an eye watering 1 to 36.3! Considering the UK average is nearer 9.5 to 1, everything is expensive. However, the issue isn’t affordability, it’s the raising of the 5% deposit, which when you take into account fees, will be in the order of £28,000. Tenants’ inability to raise that sort of money for the deposit is driving demand for rental property. For advice, call me, Jason Ou, on 020 8249 4665 or email me on [email protected]

Value

Rent

Yield

Low

High

Low

High

Low end market

Mid market

High end market

Studios

185,000

250,000

875

1250

5.6%

5.4%

6.0%

1 Bed Flats

210,000

400,000

900

1,600

5.1%

5.4%

4.8%

2 Bed Flats

280,000

900,000

1150

4,000

4.9%

4.7%

5.3%

2 Bed Houses

315,000

680,000

1,300

2,500

4.9%

4.5%

4.4%

3 Bed Flats

300,000

1,500,000

1,250

4,500

5.0%

4.4%

3.6%

3 Bed Houses

380,000

1,300,000

1,500

2,800

4.7%

3.9%

2.6%

4 Bed

550,000

2,300,000

2,050

6,000

4.4%

3.7%

3.1%

5 Bed

840,000

4,000,000

2,600

7,500

3.7%

2.9%

2.3%

Property Type

AOSmith Lettings, 43 Kingston Hill, Kingston, KT2 7PS tel 020 8249 4665 email: [email protected]

The table shows a market snapshot of Kingston showing the property price ranges compared to rent ranges for similar sized property with the gross yields that would result.