Following a discussion with a local landlord who lives in Cherque Farm , we got chatting about his two buy to let properties in Lee on the Solent and Gosport and how property in the Bridgemary Estate, where one of properties is, was so different to the Cherque Farm area where he owned the other. We got talking about the two properties in both areas and he wanted some advice on where to buy the next one. I did a comparison between the two and was surprised to find that the property market in the Bridgemary Estate area had outperformed the Cherque Farm development market by 79%!
The average price of a one bed apartment on the Bridgemary Estate is £78,800. When you consider the rents that are achieved in the Bridgemary Estate are an average of £525pm, this gives us a yield of 7.9% per year. So is the Bridgemary Estate the best investment? Well, in Cherque Farm , where the average value of a four bed detached property is £365,200 and the average rent for such a property is £1,346 pcm, giving a much lower yield of 4.44% per year. This makes the yield/ return on the Bridgemary estate 79% proportionally more than property in Cherque Farm , so surely Bridgemary is the best investment, isn’t it?
However, this is a great example of annual yield/return not being the only factor when choosing an investment property, as you should also consider how much the value of the property goes up in the long term. In the last 11 years, since 2003, property values have only risen on average by 16% in the Bridgemary Estate (rising from £67,900 to the £78,800 mentioned above), which is very impressive considering there was the 2008 property crash when property values dropped on average by 15% to 20% in a year. However, average property values in the Cherque Farm area have risen on average by 34.6% since 2003.