Cambridge House Price Monopoly: How do Prices vary?

 

Well as the nights draw in, if there is nothing on the telly, the significant other and myself like to play the board game Monopoly. The buying and renting of property, it’s like a busman’s holiday for me! Interestingly, the game was originally invented at the turn of the 20^th Century (in 1903) and the game was initially called ‘The Landlord’s Game’!  Anyway, after a few years in the wilderness, the current owners of the game renamed it in 1935 and so began Monopoly as we know it today.

So whether you are a homeowner or landlord in Cambridge, what would a Monopoly board look like today in the city? Property prices over the last 80 years have certainly increased beyond all recognition, so looking at the original board, I have substituted some of the original streets with the most expensive and least expensive locations in Cambridge today.

Initially, I have focused on the CB1 postcode only, looking at the Brown Squares on the board, the ‘new’ Old Kent Road in Cambridge today would be Gunhild Court, with an average value £172,600 (per property) and Whitechapel Road would be Bliss Way, which would be worth £188,700. What about the posh dark blue squares of Park Lane and Mayfair? Again, looking at CB1, Park Lane would be St Barnabas Road at £984,200 and Mayfair would be Lynewode Road at £1,307,200. However, look a little further afield from the CB1 postcode, and such roads as Millington Road in Newham would claim the Mayfair card at £1,985,500! Also, I can’t forget the train stations (my favourite squares), and over the last 12 months, the average price that property within a quarter mile of the station sold for was £371,300.

So that got me thinking what you would have had to have paid for a property in Cambridge back in 1935, when the game originally came out?

·         The average Cambridge detached house today is worth £572,080 would have set you back 1,035 Pounds 1 shillings and 3 old pence.

·         The average Cambridge semi detached house today is worth £384,800 would have set you back 696 Pounds 4 shillings and 4 old pence.

·         The average Cambridge terraced / town house today is worth £374,660 would have set you back 677 Pounds 17 shillings and 5 old pence.

·         The average Cambridge apartment today is worth £291,600 would have set you back 527 Pounds 11 shillings and 9 old pence.

If that sounds like another currency, you must be in your 20’s or 30’s, because it was back in February 1971, that Britain went decimal and hundreds of years of everyday currency was turned into history overnight. On 14th of February of that year, there were 12 pennies to the shilling and 20 shillings to the pound. The following day all that was history and the pound was made up of 100 new pence.

Anyway, I hope you enjoyed this bit of fun, but underlying all this is one important fact. Property investing is a long game, which has seen impressive rises over the last 80 years. In my previous articles I have talked about what is happening on a month by month or year by year basis and if you are going to invest in the Cambridge property market, you should consider the Cambridge property you buy a medium to long term investment, because Buy to let is pretty much what it sounds like – you buy a property in order to rent it out to tenants.

As I reminded a soon to be first time landlord from Impington the other week, Buy to let in Cambridge (as in other parts of the Country) is very different from owning your own home. When you become a Cambridge landlord, you are in essence running a small business – one with important legal responsibilities.
On that note, I want to remind landlords of the recent and future changes in legislation when it comes to buy to let. This year, rules have changed about tenant deposits, Carbon Monoxide detectors and early in the New Year, landlords will have responsibilities to do Immigration checks on all their tenants. Failure to adhere to them will mean a minimum of heavy fines in the thousands or in some cases, prison ... it's a mine field!

That's why I write the Cambridge Property Blog, Where it has an extensive library of articles like this one, where I talk about what is happening in the Cambridge property market, what to buy (and sometimes not) in Cambridge and everything else that is important to know as a Cambridge landlord.

The Cambridge Property Market and £1,300,000,000,000,000,000 in loose change

The 5^th of March 2009 was the date Mervyn King, the then Bank of England Governor, slashed UK interest rates to the unparalleled figure of 0.5%. In just under five months, starting on 8^th October 2008, the rate had come down from 4.5% to that low figure, all in an attempt to ensure the British economy survived the worldwide credit crunch. Now as we deck the halls with bows of holly nobody expected that, over six years later, rates would still be at that low level.

In the summer, people were predicting a rise in the New Year, yet now, some forecast it may remain the same for years to come the due to the issues in China. Now, I am not some City Whiz kid with a hotline to Mr Carney at Threadneedle Street, but merely a humble letting agent from Cambridge, so I can not profess to know what will happen to interest rates. However, what I do know, speaking to my Cambridge friends and Cambridge landlords is that these low interest rates have hit savers really hard.

If you added up everyone’s bank and building society savings in the UK, they would add up to £1,300,000,000,000,000,000 (that’s £1.3 trillion), most of which is earning a pittance in interest. That is why more and more 40 and 50 year old Cambridge landlords have been investing some of that cash into Cambridge bricks and mortar, as they search for a low risk investment opportunity.

Buying a Cambridge buy to let property isn’t risk free, but there are certainly things you can do to mitigate and lower one’s exposure to risk. You see by buying a rental property, it potentially offers an enigmatically decent proposition in terms of being able to obtain attractive returns that beat inflation and savings accounts, yet without taking the levels of risk associated with stock markets.
 

The UK residential property market has long been the safest form of collateral for lenders of all varieties. Against a backdrop of a greatly changing economic environment, Cambridge house prices have been extraordinarily robust, increasing by over 1886.3% between 1974 and today. Some will say there have been significant property price falls, namely in 1975, 1988 and 2008, yet each time after this has been followed by an upturn in property values. For the record, the stock markets in the same time frame only rose by 432.5%!

.. and that is the best thing about buy to let property. Unlike the stock market, with its unfathomable equities, shares and bonds, that nobody really understands (as they are controlled by some faceless whizzkid in Canary Wharf!) with a buy to let property, landlords can take control and understand their investment .. in fact you can touch and feel the bricks and mortar investment.

..  but before you go out and buy any old Cambridge property, plenty of landlords still get it wrong. You have to be aware of your legal responsibilities when it comes to tenant safety, tenants deposits, energy certificates and in the new year, landlords will have the added responsibility of checking the immigration status of prospective tenants. Get it wrong and big fines and even prison is an option – but that’s why many agents use a letting agent to manage their property for them.

Next, you have to buy the right property at the right price. Recently I have seen some really heart breaking situations in Cambridge and the immediate area, of people paying way too much for a property, only to lose out when they came to sell. One example that comes to mind is that of a property owner in a Victorian terrace on York Street in the east of the city within walking distance of Mill Road with its fascinating array of restaurants and shops .. a decent two bed terrace, 61 sq metres inside (656 sq ft in old money) sold in September 2005 for £208,500. In the summer, it only obtained £207,500, a drop of 0.48% or 0.05% a year – a disappointing result.

 

I cannot stress enough the importance of doing your homework. One source of information and advice is the Cambridge Property Blog where I have similar articles to this about the Cambridge property market and what I consider to be the best buy to let deals around at any one time in the City, irrespective of which agent it is on the market with. If you haven’t visited and you are interested in the local property market in Cambridge .. you are missing out! .. http://cambridgeproperty.blogspot.co.uk/

Cambridge vs Peterborough – the East Anglian Property Market battle

Many landlords have been asking me my thoughts on the Cambridge property market recently, and in particular, what is happening to property values. My calculations show property values in Cambridge quite interestingly grew in the month of September by 0.2%.  When one looks at the annual growth, Cambridge values are 8.2% higher (when comparing Sept 14 to Sept 15), impressive when you consider the annual growth of property values was only 7.7% per annum in May.  On the other hand, there are signs that the fundamental growth of property values in Cambridge has now peaked, despite those average property values being above levels recorded in 2007 (just before the 2008 crash).

Whilst the Cambridge headline rate appears to be better, i.e. the year on year (Sept 14 to Sept 15) growth rate of 8.2% is obviously better than the 7.7% in May 14 to May 15), this impressive rise of Cambridge property values masks the underlying truth in what is really happening to local property values in the City.  Throughout 2015, property values have been yo-yo like on a month by month basis, being quite volatile in nature.  For example,

·         September 2015               0.8% rise

·         August 2015                       1.4% rise

·         July 2015                              1.3% rise

·         June 2015                            0.7% rise

·         May 2015                             0.4% rise

·         April 2015                            0.6% rise

·         March 2015                         0.2% rise

This is in part due to seasonal factors, as well as mortgage approvals increasing over June and July and then falling by over 15% in August, according to the Council of Mortgage Lenders (CML).

The outlook for the Cambridge property market remains positive against the foundations of low mortgage rates and growing consumer confidence. However, I do have to question the recent CML mortgage data and whether that raises issues over whether the rate of growth since the Tory’s were re-elected in the early summer can continue? However, on a positive note, Cambridge property values are still running ahead of salaries and average property values are 8.7% above the levels recorded in 2007.

 

Talking to fellow property professionals in the city, demand for property has been showing signs of moderating in the final few months of 2015, which in turn will lead to a slight slowdown in the pace of house price growth in the run up to the festive season. You see, it is really important not to read too much into one month’s (September’s) headline figures.

Readers might be interested to note that before the 2008 property crash, all the UK region’s housing markets tended to move up and down in tandem like the Cambridge Synchronised Swimming team at the Parkside Swimming Pool!  Since then though, the Greater London property market took off like a rocket in 2009/10, whilst the rest of the UK only really started to grow in 2012/13, and even then that growth was a lot more modest than the Capital’s. Looking closer to home, it can even be different in neighbouring towns, areas and cities, so whilst Cambridge property values are 8.2% higher than a year ago (as mentioned above), Peterborough property values are 4.5% higher than a year ago.

I cannot stress enough the importance of doing your homework. One source of information and advice is the Cambridge Property Blog where I have similar articles to this about the Cambridge property market and what I consider to be the best buy to let deals around at any one time in the City, irrespective of which agent it is on the market with. If you haven’t visited and you are interested in the local property market in Cambridge….. you are missing out!
http://cambridgeproperty.blogspot.co.uk/

Values of Cambridge Terraced Houses smash through the £400/sqft barrier

The Council of Mortgage Lenders (CML) latest snapshot of the buy to let mortgage market shows us that buy to let landlords haven’t been put off by the Chancellors announcements on the way buy to let’s are taxed.

Last month, the CML stated £1.4billion was borrowed by UK landlords to purchase 10,500 buy to let properties, up 26.5% from the same month in 2014, when only 8,300 properties were bought with a buy to let mortgage. Go back two years and the number of buy to let mortgages used for purchasing (again not re-mortgaging) is 36.4% higher! Even more interesting has been the fact that the average amount borrowed has risen as well. The average buy to let mortgage last month was £133,330, up from £128,480 a year ago.

In Cambridge, I am speaking to more and more landlords, be they seasoned professional landlords or FTL’s (first time landlords), as they read reports that the Cambridge rental market is doing reasonably well, with rents and property values rising.  Interestingly, one landlord recently asked how much he should be paying per square foot (more of that in a second).

The first thing you have to decide is whether you want great capital growth or great rental yield, as every knowledgeable landlord knows, you can’t have both. Over the last twenty years, property values in Cambridge have risen by 233.23%, compared to Greater London’s 436.2%. This has proved that capital growth increases faster in the more expensive South, but your investment money doesn’t go very far, meaning there won’t be as much rental yield from a 1 bed flat in Chelsea (2% per year at best with a fair wind) as a 2 bed semi in Cambridge. However, whilst the figure of 233.23% is an average for the area, certain areas of Cambridge have seen capital growth much higher than that and others areas much worse (we have talked about those in previous articles).

If you recall in an earlier article, my research reveals that Cambridge apartments tend to generate a better yield than houses, probably because several sharers can afford to pay more than a single family. But houses tend to appreciate in value more rapidly and may well be easier to sell, simply because there are fewer being built.

So what should you be buying in Cambridge, and more importantly, how much?

·         The average apartments in the City are currently selling for approximately £431 per square foot.

·         Terraced houses in Cambridge are currently obtaining, on average, £351,300 or £401 per square foot,

·         An average semi in Cambridge is selling for £364,500 (and achieving £357 per square foot). 

Now these are of course averages, but it gives you a good place to start from. In the coming weeks, I will look at rents being achieved on Cambridge houses and apartments, and the yields that can be obtained, depending how many bedrooms there are. In the meantime, if you would like to read more articles like this, then can I suggest you visit the Cambridge Property Blog?  http://cambridgeproperty.blogspot.co.uk/