Which has performed better? Burton or Derby.

One topic that I am always asked about, both by existing landlords and new ones, is how one town's property values have performed against another. When purchasing a buy to let property, there are two ways landlords make money through property letting - capital growth and rental income growth.

When a property increases in value over time, it is known as 'capital growth'. Capital growth has been strong in recent times in both Derby and Burton, but the value of property does go up as well as down, and of course the local conditions surrounding your property have a big effect.
Rental income is what the tenant pays you - hopefully this will grow over time too. If you divide the annual rent into the value (or purchase price) of the property, this is your annual return.

A landlord from Ticknall, who has a number of properties in both Burton and Derby, asked me a few weeks ago the difference between Derby and Burton housing markets. I was quite surprised with my findings, and wanted to share them with you.

The average property price in Burton is currently £171,600. In the last 3 months, property values in Burton, according to my calculations have risen by just over 2.4%, which starts to claw back the losses we         experienced in the middle part of 2012, when values dipped by nearly 4.7%. That sounds a lot, but roll the clock back a few years and in 2011, values dropped 6.2% from property values being achieved the year before.
However, irrespective of the roller coaster prices we have seen in Burton, because between those downturns, we have seen equally good price rises. That is why it so important to look at house prices in the long term. To make Burton property owners happy, they are still 10.3% higher than they were in 2009 (but before you get the Champagne on ice, we still have 7% to go before we reach the 2007 peak).

Derby, has seen a slightly different story. Whilst in Burton, prices would needed to rise by 7% to take average values back to the 2007 peak, Derby’s property values are 8% away from those 2007 peak prices. Therefore, is Burton or Derby the better bet? Well, the other part of investing is yields. As we have         mentioned in previous articles, yields are very similar in both places, with Derby probably having slightly higher yields. However, a couple of trips in the car up the A38 will soon finish off that difference.

One final thought though, landlords often buy what they know and they like to have their rental properties in the town they live in .. because they know the area. These sorts of things can’t be expressed in values and yields.

Each Burton (and Derby) landlord will have different needs and requirements in his or her property investment. I am able to give an objective and unbiased opinion on what (and what doesn't) make a good property investment. Knowing what has happened to values in different towns, enables me to spot any trends or opportunities for buy to let landlords. If you would like to have a chat about any matter relating to property in Burton, pop in and see me, or my team, in our  offices on the High Street.


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burton@professionalproperties.co.uk     www.pplets.co.uk