Leamington Spa Property market: South of River outperforms the North by 22%

Following a discussion with a local landlord who lives in the Myton Road area, between Leamington and Warwick, just near St. Nicholas Park, we got chatting about the different sides of the river in Leamington and how it affected the  property market. Interestingly, he had a couple of properties in both areas and wanted some advice on where to buy next. I did a comparison between North of the River and South of the River, and quite surprisingly the property market South of the River Leam had outperformed the North market by 22%!

South of the river's property market - 22% better than the North's

The average price of property South of the River is £215,700. When you consider the rents that are achieved South of the River are £978 per month, this gives us a yield (annual growth  or the annual rent from a property reflected as a percentage of the value of the property) of 5.4% per year. 

So is South of the River the best investment? Well, yields North of the river , where the average value of a property is £302,100 and the average rent is £1,110 per month, offer a 22%  lower yield of 4.4% per year (compared to the 5.4% per year in the South), so surely it is the best investment, isn’t it?

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 12 months, property values have only risen on average by 6.7% in the South of the River area, which is very impressive. However, average property values North of the River have risen on average by 8.25% (23% better than the South) in the same time frame. The question that every landlord must ask from their investment is,  do you want capital value or yield? 

I always tell Leamington landlords, capital growth and yield are two phrases that are one and the same with property investment and can have a big impact on the long term results of your property investment. 

 Many investors believe that by chasing high yielding properties they will make a faster profit than waiting for capital growth. The problem with this is that to achieve high yield you usually have to compromise on capital growth. Therefore,  it would seem the most logical solution is to find high a yielding property in a strong capital growth area. Such properties don’t exist (or if they do, I don’t know of them!)

This is because, as I tell my landlords,  there is generally an inverse relationship between yield and capital growth so the higher the yield, the lower the capital growth and the higher the capital growth, the lower the yield. This means property investment becomes all about balancing the scales. 

Whether you are a new landlord or an existing landlord, I don't charge for my advice because if I offer you the best opinion and we build a relationship, then you might (and there is no obligation or expectation to this) just use me to manage those properties and so I have plenty of time to earn money from you by looking after your buy to let property for years to come, a property that we jointly decided met your requirements for the investment .. because that is what it is .. an investment.  So, feel free to pop into our office’s in Leamington Spa for a chat about the property market in our town.