It pays to be in the right location

News: Location

May 09, 2013

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The spring of 2013 may not have come as soon as we would have liked, it may not have brought about the much hoped for bounce in business, but it sure has brought an avalanche of research from every man and his dog.

There are more house price indices than you can shake a brick at; there are, seemingly, more mortgage statistics about than there are mortgages arranged, the question is, are we interested?

For most estate agents, what is interesting is their own patch. The wider market’s viability and stability may be worth a glance, but what really matters is what’s happening in their office.

One agent recently told me that he knows his area, every street, every planning application, every instruction he doesn’t win and every sale that takes place. And that’s it; all that matters. It works for him, his agency is successful, his 6 series BMW is still parked outside, his retirement plans are coming on nicely.

This agent says it’s all about location – your office location, that is – and maybe that’s right. If you’re in a great area, the business comes, more easily perhaps, than battling on in a place where nobody wants to buy, rent or invest.

His agency is on the south coast; great beaches, scenery, space, accessible to London, ports a-plenty for the classy voyage or the weekday booze-cruise, country pubs and quayside restaurants. A very pleasant place to live – and to work – in.

His view is not exclusively his, many of us ‘do like to be beside the seaside’ and dream of escaping to the country, retiring to the coast and it has also been borne out by recent reporting on the Best Places to Live in the national press. Many of the towns cited as best for bringing up families, best for retirement, best for foodies etc. are by the sea! This research is, to me, much more interesting than figures, we all want to live somewhere nice, and if we don’t already, it’s good to know where to dream about.

The latest instalment of this research genre has just come from HSBC, who must be thinking of accelerating their Buy to Let lending (landlords take note!). London may be the honey trap but it’s a coastal city that comes out tops in terms of return on investment.

Southampton, offering affordable property, a rental yield of 7.82 per cent and average rents of £901pcm (private rental accommodation makes up almost a quarter of its housing stock), tops the UK wide list as the best place for buy to let investors. Southampton may be more city than pretty, but many of the surrounding areas are gorgeous.

London, by comparison, does not score highly in terms of rental yields due to the comparably high property prices. The top performing borough, Southwark, is 13th overall while Hammersmith and Fulham and Kensington and Chelsea are ranked bottom in the top 50 due to the high initial purchase costs, generating returns of just 3.42 per cent and 3.34 per cent respectively.

Seaside towns are generally a far better bet, says HSBC, many are buy to let hotspots, 17 of the top 50 areas found on the coast. Blackpool tops the seaside town list with a yield of 7.81 per cent. The rest of the top ten seaside towns is made up of southern destinations such as Brighton, Bournemouth and Eastbourne. While property prices tend to be higher, rents are also above average, meaning yields are strong for investors.

So it seems my happy agent does have it right, a great location for his business, a nice place to live and work and a distinct lack of interest in the outside world!

What Sheila Manchester doesn’t know about the property industry, quite frankly, isn’t worth knowing. We are delighted that she continues to provide insightful articles for Moneypenny.