01.5.2007

Is Wales a buy to let 'hot-spot'?

Rents up 33% in a quarter, property prices up by 18%, where is this perfect buy to let environment; Riga, Bansko, N.Ireland? No it's Wales apparently. Despite the fact the Nationwide in its latest report suggested price rises in Wales were negligible (approx.1% in the last quarter once overall inflation was taken into consideration), buy to let investors with Paragon have been bucking this trend, witnessing their purchases increase by 1800% above the average over the last quarter. The image to the left is of Fantasyland - a land of 'make believe' apparently..not Wales..
Paragon Mortgages reports that property prices in Wales increasec by 18 per cent over the past quarter, fueling the buy-to-let (BTL) market. ..
Rents are up by 33 per cent over the past quarter and property prices by 18 per cent. Rental yields also followed a positive trend, with Wales the only region of the country where yields exceed 7 per cent.
Wales stood in second position in terms of total return, generating an average of 25.6 per cent - compared with an average of 12.9 per cent for England and Wales as a whole.
John Heron, managing director of Paragon Mortgages:
"Rents are rising strongly in Wales, but so are property values, although to a slightly lesser extent. On the back of that, investors have been enjoying steady rises in rental yields over the past few months, up from 6.3 per cent to 7.1 per cent in one quarter. With a positive economic backdrop underpinning growth in tenant demand, it is not surprising that Wales is the country's top performer in terms of yield, and the only region to generate average rental yields in excess of 7 per cent."
Strong buy-to-let performance in Wales has been a boom to Welsh-based intermediary businesses. Paul Rockett, managing director of Cardiff-based TBMC, commented:
"Buy-to-let is doing well up and down the country, but Wales is a particular hot spot. Following the successful redevelopment of Cardiff, from the Bay area outwards, we're now seeing regeneration spread to other towns in South Wales, such as Swansea and Newport. Many international companies have moved into the Principality and this creates additional demand for homes, particularly for rented accommodation among younger workers who can't or don't want to buy for the time being, or foreign employees who may be here on a short term contract."
In March, the average annual rent achieved by landlords in Wales was £11,251, up 32.7 per cent on the figure in December (£8,480), on a typical property worth £158,239, up 17.5 per cent on December's figure (£134,727).
An investor who bought a property one year ago will have generated an average total return of 25.6 per cent or £34,079 on a property worth £133,297 in March 2006.
John Heron concluded:
"The astute landlord who invested in buy-to-let in Wales this time last year will have achieved almost twice the national average total return. While the national picture remains strong, residential property investment looks particularly attractive in Wales. Trends in the local economy are very positive, creating new jobs and causing an influx of workers into the area, which in turn fuels tenant demand".
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