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THREE FOR THE PRICE OF ONE!
By Daniel Morgan, managing director, Property Investors Wales.

In a recent comparison between house prices in Aberdare & Bristol, it was clearly demonstrated that you could buy almost 3 properties for the price of 1 in Aberdare - which would give you 3 times more yield and property price growth over the long term…and that’s without buying at a discount below market value!

It’s quite clear from the comparison table above that housing in Aberdare is much more affordable than in Bristol.

If you look at how ‘High Street banks’ have stopped self certified mortgages and take a much closer look at affordability then you can see that Bristol is much harder for first time buyers to make that first tentative step on the property ladder.

In comparison to Aberdare, where property prices are only 4 times the income, then its more likely there is going to be more first time buyers in the market, which is extremely important - because when you invest in property you need to consider your exit strategy from the onset.

Similarly, when you compare yields between Aberdare and Bristol there is also a big difference when it comes to return on investment.  Aberdare gives a much better yield, and with average mortgages at around 5.5% it’s going to be difficult to make good cash flow in Bristol unless, of course, you look at HMO or larger deposits.

Compare all this information to the fact many of our properties within the South Wales valleys are available at around £50,000 and the yields jump even higher -25% below average price: £50,000; 10.7% average yield based on discount price, & 3 times average income ratio.

I believe there is more scope, demonstrably, for property price growth in areas such as Aberdare, where high yields and low house prices in relation to income provide better chance of rises in property prices – making these areas a greater investment opportunity!


*Data analysed from HM Land Registry Records Jul-Sep 2009 and LHA Direct.