Northampton.... good time to buy property?

Following last week’s article, I had an interesting chat with a chap who lives in Quinton, who popped into our office on Wellingborough Road, whilst his better half was at the Northampton General. He is thinking of buying his first buy to let property and he wanted my opinion on the state of the market and if it was a good time to invest.

He was particularly worried that with all the newspaper headlines of a booming housing market, there wouldn’t be any demand from tenants. One of the best pieces of advice I can give to those looking to invest in property is a simple trick of the trade. You can judge the affordability of an area’s property market (and thus how much demand there could be) by simply finding the ratio of the average property price to the average salary. The lower the ratio, the more affordable property is.

When we put this to the test, as we talked about a few weeks ago, we found that Northampton currently has an average property value of around £212,300. The average salary of someone living in Northampton is estimated at £26,169 giving a ratio of 8.11 to 1. Most lenders will only lend up to 4.5 times income, so to buy that average house in Northampton at £212,300, a first time buyer would need to be on a salary in the late £40,000’s (just over £47,100 to be precise and that is a minimum) and even then, would need to raise the 5% deposit, which when you take into account buying fees, will be in the order of £12,600.

The questions I seem to be asked on an almost daily basis by landlords are:-

·         “Should I sell my property in Northampton, or even buy another?”

·         “Is the time right to buy another buy to let property in Northampton and if not Northampton, where?”

·         “Are there any property bargains out there in Northampton?”

When considering this landlord’s buy to let portfolio, yields can be in the order of an average 4% to 7% per year, depending where you buy, so combine that with steady rental growth, excellent increases in capital values of the properties themselves and it could be a good time to invest in the property market in Northampton.

Tenants’ inability to raise that sort of money for the deposit is driving demand for rental property. If you would like some advice about buying to let, be you a landlord with a portfolio or someone thinking of investing in the rental market for the first (second or third...) time, please pop in and see me at our office in Wellingborough Road in Northampton or visit the Northampton Property Blog www.northamptonpropertyblog.co.uk