Friday 28 October 2016

Helston – more than worth a look for property investors?


 
In a property investment sense Helston is often overlooked in favour of the larger coastal towns like Falmouth, St Ives and Newquay. This may be because of the wider choice in general amenity as well as a greater opportunity to holiday as well as long term let properties in these coastal ‘hot spots’.

 

Let us not downplay Helston though. There is much to find appeal in this historic market town. It boasts the only military base of note in the County, one of the most popular theme parks in the region as well as a diverse local economy. The schools compare favourably in terms of performance, and it boasts on its doorstep an attractive coastal geography second to none. It is unsurprising therefore that in recent years canny corporates like Sainsbury’s, Tesco’s, Whitbread’s and latterly Premier Inn and Weatherspoon’s have all invested heavily to provide better amenity to the area. They clearly know something which the rest of us should take notice of?   

 

 
House prices have gone up over  the last decade, but increases have been more modest than say Falmouth which is only 10 miles away. Using Zoopla house price statistics for the last 12 months, the average house price in Helston was £246,744. This compared to a heady £312,937 for Falmouth. Looking at more than 800 property sales between the two towns, properties in Falmouth are 27% more expensive than buying in Helston! Although wider statistics don’t exist in the same way for rental properties, we have extrapolated  comparable rental returns from our portfolio of more than a 100 rentals between the two towns. The key statistics are that while prices are 27% more expensive in Falmouth, rental returns are  only 15% greater than in Helston. This would suggest that relative to the traditional investment hotspot of Falmouth, there is good value to be had in investing in Helston.

 
The rental market for two and three bedroom family homes is particularly buoyant. Recent experience have highlighted that several working families are chasing too few family properties. The driving force for this is the familiar tale that working class families on modest incomes, many with zero hour contracts struggle to find the deposits necessary to get a mortgage. Unless lending patterns change, long term letting for many Helston families will be a way of life.

 


Two bedroom properties in Furry Way and Nanscoba Place (see photos above)  currently on the market with Christophers Estate Agents are on for sale at around the £150,000 - 160,000 mark. They will return a rent of £600-625 per month. The equivalent in the Longfield area of Falmouth are on the market for closer to £200,000 and will return £700-725. The gross return in Helston is around 4.7% to 5 % versus 4.35% for Falmouth.
 

Just like the words of the song that celebrates this old town’s most famous day, as a property investor choosing to take the plunge you might just be Dancing here, prancing there,  jigging, jogging everywhere…..




 

Friday 21 October 2016

What is the impact of Brexit on the property market?


 


 Shortly after this countries decision to exit the EU we wrote in The West Briton about the mass hysteria surrounding the result and its potential impact on the property market locally.  We likened the response to the children storybook character ‘Chicken Lickin’ whose prediction was that the sky would fall in. Although the fallout of the decision to leave, won’t be realised from several months or possibly even years, one thing is for sure - the sky hasn’t fallen and is unlikely to do so either.



 
People have continued to breathe, have a pint, watch Strictly, go on holiday and god forbid even buy and rent houses.

 
There are conflicting forces at play in the housing market. The target of building at least 300,000 houses nationally has not been met with barely more than 200,000 houses being built in the last few years.

 
Mortgage interest rates are at their historical lowest and this has meant that there are some favourable lending deals. This should translate to creating a pent up demand for housing, particularly in Cornwall where there is significant inward migration. However the conflict is in the restriction on lending and 'tough' affordability rules brought in by the EU. More 'responsible' lending has translated into a more restrictive lending regime. This has meant that low income families will find it hard to get on the housing ladder. The irony is that many of these tenants will continue to pay as much in rent as they would with a mortgage!

 
What of the local property market?

 
With sterling  lower than it has been for a decade, there might be some refuge for overseas investors buying on these shores. Similarly for those considering the relative merit of investing in the county as opposed to buying a property in France or Spain, the poor exchange might make them think twice. However given the numbers of these investors the impact either way is hardly likely to be earth shattering locally.

 
Zoopla property statistics for the last three months in Cornwall indicate an average fall in house prices of 0.35% with very little regional variation. With average house prices across the county at £240,000, this is barely a £700 drop off for each sale.

What is perhaps more interesting is the tail off in the number of sales in the last quarter. Of the 8245 house sales in Cornwall in the last year, only 1095 or a paltry 13% of these sales have come in the last three months. In Truro there were 111 house sales and in Falmouth there were only 48 house sales! In the previous quarter (which were slow too), there were 210 and 118 sales respectively for Truro and Falmouth.

 
What do these statistic tell us? Aside from the fact that your shiny suited estate agent was probably asking his mates to stand him a pint at the bar, it indicates that confidence in the property market was dented but not hammered. It clearly indicates that people were holding back from buying properties both before the Brexit referendum and in the months after. However those buyers that did enter the market weren’t exactly bagging themselves a bargain as house prices retained parity.

 
The rental market raced away as it usually does in the Summer months. As a growing agency we experienced early mornings, late nights and a constant frustration that supply of good quality rentals continues to keep up with supply. Hence if you can’t sell your house and realise your asset this way, look to rent it. Rental returns remain strong and there are some decent quality tenants looking to find a home.

 
The next quarter will be interesting. I wonder who is going to win Strictly, will Ross Poldark ever smile and will my estate agent friends actually buy a pint?