Derby vs Nottingham... property values, not football!

One topic that I am always asked about, both by existing landlords and new ones, is how one city’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 Nottingham and Derby, 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 and, 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.

I was attending the Graham Penny Auction in Nottingham a couple of weeks ago and a landlord from Breaston, who has a number of properties in both Derby and Nottingham, asked me about the difference between Derby and Nottingham housing markets. I was quite surprised with my findings and wanted to share them with you.

The average property price in Derby is currently £170,300. In the last 3 months property values in Derby, according to my calculations, have risen by just over 2.6%  which starts to claw back the losses we experienced in the latter half of 2012 when values dipped by nearly 1.75%. That sounds a lot, but roll the clock back a few years and in 2011 values dropped 5.6% from the property values being achieved the year before. However, irrespective of the roller coaster prices we have seen in the City, they are still 9.65% higher than the 2009 slump (before you get the party hats on, we still have 8% to go before we reach the 2007 peak!).
Nottingham, has a slightly different story. Whilst in Derby, prices would need to rise by 8% to take average values back to the 2007 peak, Nottingham property values are only 6.5% away from those 2007 peak prices. In 2007, the average property price in Nottingham £174,200 and today it is a respectable £162,800. Therefore, is Nottingham the better bet?

Well, not necessarily. Over the last 2 years, property values have increased at a 56% quicker rate than Nottingham’s. If this trend carries on, Derby might overtake Nottingham in 18 months, in relation to long term house price growth. But then there is question of yield, as  Nottingham normally has higher yields than Derby, but Nottingham’s rental market can be quite fraught with its stricter rules.
Each Derby (and Nottingham) landlord will have different needs and requirements in his or her property investment. We are 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 us to spot any
trends or opportunities for buy to let landlords.

If you would like to discuss my thoughts on the rental markets, please feel free to pop into our offices on St.James Street, contact me on 07977 235545 or drop me an email; simonj@professionalproperties.co.uk

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Call me at our office on: 01332 366171 or visit the website: www.pplets.co.uk