WALES – Rugby, Choirs, Coalmines, tongue-twisting names…& the Land of Opportunity for Property Investors!
With a diverse mix of ethnicities and a good combination of populated cities and rural countryside, Wales is an often-overlooked investment hotspot in the UK. Boasting of large 2, 3 and 4 bedroomed terraced properties with stable prices and high yields, only the more discerning property investor has been aware of the Welsh housing market.
Wales has not been such a victim to the boom and bust of property prices witnessed in many parts of northern England, and property prices realise high yields, sustainable values and are a ‘vanilla’ product which are ideal for both investors and families.
Transportation links are second to none throughout the principality with good commuter routes into the major towns & cities – and just 3 hours from London.
Traditionally investors have favoured areas such as the South East of England for capital appreciation and the North of England for yield. However, very few people in the world have made money from following the trend.
North Wales & the South Wales valleys has become a ‘hidden secret’ for many property investors with the majority of landlords being local to the area. There is a strong demand for rental properties from both families in rural areas to young professionals in town centres and cities.
The realistic market valuations of property in Wales make them ideal for first time buyers along with property investors, which means selling your assets in the future will be easier if they can attract owner-occupiers rather than just fellow landlords.
The South Wales Valleys are a number of industrialised valleys in South Wales, stretching from eastern Carmartheshire in the west to western Monmouthshire in the east and from the Heads of the Valleys in the north to the lower-lying, pastoral country of the Vale of Glamorgan and the coastal plain around Swansea Bay, Bridgend, the capital Cardiff, and Newport. Many of the valleys run roughly parallel to each other, and the Rhondda Valleys and the Cynon Valley are located roughly in the centre.
Within the valley areas, in particular, there are countless opportunities for the ‘clued-up’ investor! Many homes are low-priced, older build and terraced, concentrated in the lowest Council Tax bands; few are higher-priced detached homes. Predominantly large terraced properties, valuations are between £55 - £70,000, rentals between £350-£450 monthly on average, and yields generally between 8.5% up to 11%.
There is a strong demand for rental properties from both families in rural areas to young professionals in town centres and cities.
Daniel Morgan, managing director of Property Investors Wales, said “We believe that the realistic market valuations of property in Wales make them ideal for first time buyers, along with experienced investors. In effect, that means selling your assets in the future will be easier if they can attract owner-occupiers rather than just fellow landlords. “
He added, “Currently buy to let mortgage rates are relatively low and because of this rental yields are strong, so this is a very good time to buy BMV properties at fixed interest rates and lock in the rental yield.”
A relatively large number of local people are employed in manufacturing, health and social services. Fewer work in managerial or professional occupations, and more in elementary occupations, compared to the rest of the country.
With an extensive road and rail network, there is a significant commuter market to city centre jobs, particularly from Caerphilly, Torfaen, and Rhondda Cynon Taf.
The area also benefits from a local landscape described as "stunning".
The geographical shape of the valleys have their effect on culture. Many roads stretch along valleys connecting the different settlements and consequently the different towns in a valley are more closely associated with each other than they are with towns in the neighbouring valley - even when the towns in the neighbouring valley are closer on the map.
The Heads of the Valleys road, the A465, is significant due to its connection of valleys with each other, and the upgrading of this road to dual carriageway has improved the economic performance of the region as the road becomes the main thoroughfare to South West Wales from the West Midlands.
It has also been predicted recently that a European-style rental market could soon emerge in Wales as first-time buyers struggle to get on the property ladder.
Many estate agents throughout Wales are reporting that their lettings businesses are much busier than their sales, with demand from tenants outpacing available properties.
Many have said that while some potential first-time buyers may be holding off buying because they cannot get a mortgage (or because they think prices may fall further) many had simply decided to rent instead.
In independent surveys carried out by landlords, in response to the question ‘What’s your intention for the next six months?’ the vast majority of tenants are stating that they intend to stay in the property for another 12 to 18 months, with half stating that they’re always going to rent, and that they’ve no intention of buying.
The private rental sector could therefore hit at least 25% of the total Welsh housing stock over the next six or seven years, compared to a European average of up to 45%.
Chairman of the National Landlord Association in Wales, Lee Cecil, recently said: “There’s a range of reasons why people are looking for rented accommodation.
“Graduates around the age of 25 are used to a rental mentality - it provides them with the flexibility when starting their career. And according to HMRC figures, the average age of a first time buyer is 37, which is another reason why you get people looking for a rental.
“It’s becoming a trend – the UK will become more of a European mentality for renting.”
This provides refreshing news for the Welsh property investor - with projected rental prospects at an increase, and house prices remaining at an all-time low, there has probably never been a better time to buy.
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