Capital growth or yield?

A couple came into our office this week looking to purchase another buy-to-let in Exeter.  

They already have three other properties in city and are getting a good monthly return, however as the properties are of relatively low value, they are concerned that the capital growth they will be getting may not be enough to cover their future plans, especially as they are currently on interest only mortgages.

I decided to look into the areas of Exeter that have achieved the greatest capital growth over the last six months, although this is a relatively small time period to make an accurate judgement on a market, it does show the current demand and trend.

Interestingly EX1 came out on top of the list, with an increase of just over 6.8%.  EX1 encompasses the city centre, Heavitree, Whipton, Monkerton and half of Pinhoe.  These areas are not known for their particularly high house prices, the average property price is currently just over £232,000, however as there are a large proportion of terraced properties (around 36.5% of the housing stock), they lend themselves well to the investment markets and buy-to-let landlords.  The area has excellent access routes and public transport so it is ideal for people working in and around the city.

The area with the lowest capital growth over the last six months is EX2, at around 5.85%.  EX2 covers a large area, from Dunchideok through Alphington, part of St Thomas, Countess Wear, St Leonards, St Loyes and Broadfields to Clyst Heath, Digby and Sowton.  Similarly to EX1, this area has excellent transport links and a wide variety of housing stock so it suits many different types of households.

The decision of where this couple should buy could be very different to where you should buy; it is linked to your personal position and requirements.  Therefore, if you are looking to buy an investment property in Exeter, come and talk to us so we can look at the best place for you.