Clapham House Prices vs Clapham Rents since 2006
The Clapham housing market is a fascinating beast and has been particularly interesting since the Credit Crunch of 2008/9 with the subsequent property market crash. There is currently some talk of a ‘property bubble’ nationally as Brexit seems to be the ‘go-to’ excuse for every issue in the Country. Upon saying that, looking at both what we do as an agent, and chatting with my fellow property professionals in Clapham, the market has certainly changed for both buyers and sellers alike (be they Clapham buy to let landlords, Clapham first time buyers or Clapham owner occupiers looking to make the move up the Clapham property ladder).
Clapham house values are 5.7% lower than a year ago, and the rents Clapham tenants have to pay are 0.3% lower than a year ago
When we compare little old Clapham to the national picture, national property values have risen by 0.4% compared to last month and risen by 3.0% compared to a year ago, and this will surprise you even more, as nationally, property values are 19.8% higher than January 2015 (compared to 11.4% higher in the EU in the same time frame).
However, if we look further back...
Since 2006, Clapham house values are 111.7% higher, yet the rents Clapham tenants have had to pay for their Clapham rental property are 32.6% higher
...which sounds a lot, yet UK inflation in those 12 years has been 42%, meaning Clapham tenants are 9.4% better off in ‘real spending power terms’.
Looking at the graph, the rental changes have been much gentler than the roller coaster ride of property values. I particularly want to bring to your attention the dip in Clapham house values (in red) in the years of 2008 and 2009 ... yet as Clapham property values started to rise after the summer of 2009, see how Clapham rents dipped 6/12 months later (the yellow bars)…. Fascinating!
So, we have a win for tenants and a win for the homeowners, as they are also happy due to the increase in the value of their Clapham property.
However, maybe an even more interesting point is for the long-term Clapham buy to let landlords. The performance of Clapham rental income vs Clapham house values has seen the resultant yields drop over time (if house prices rise quicker than rents – yields drop).
Whilst, it’s true Clapham landlords have benefited from decent capital growth over the last decade –with the new tax rules for landlords – now more than ever, it’s so important to maximise one’s yields to ensure the long term health of your Clapham buy to let portfolio. More and more I am sitting down with both Clapham landlords of mine and landlords of other agents who might not be trained in these skills - to carry out an MOT style check on their Clapham portfolio, to ensure your investment will meet your future needs of capital growth and income. If you don’t want to miss out on such a MOT check up, drop me a line – what have you got to lose? 30 minutes of time against peace of mind - the choice is yours.
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