X

Sign Up

or

By signing up I agree to Property Tribes Terms and Conditions


Already a PT member? Log In

Sign Up

Sign Up With Facebook, Twitter, or Google

or


By signing up, I agree to Property Tribes Terms and Conditions


Already a PT member? Log In

Log In

or


Don't have an account? Sign Up

Forgot Password

To reset your password just enter the email address you registered with and we'll send you a link to access a new password.


Already a PT member? Log In

Don't have an account? Sign Up

  • Property-a-holics

    Capital growth - poor areas vs. wealthy areas

    Some really good chat on another thread about capital gains. I thought I’d look for some data on house price changes. We all know that infrastructure projects can improve prices.

    But my question is: over the long term is there a difference in the gains made between wealthy and poorer areas? I can’t find anything to answer this. Thoughts welcome, data very welcome!
    0
    0

    The maths alone will tell you the answer imho.

    If you have two properties, one at £40K and one at £400K and they both capital appreciate at 3%, the £40K property will earn £1200 capital appreciation per annum, whereas the £400K property will earn £12K.

    So the following year, the lower value property will earn capital appreciation on £41,200 and the higher value property will earn capital appreciation on £412K.

    Einstein described compounding as the "eight wonder of the world".  The money that money makes, makes money, and the money that that money makes even more money.

    So, even if you adjusted the figures to the £40K property earning 10% per annum, it is unlikely to ever capital appreciate more than the £400K property earning 1% per annum at the same time.

    1
    1

    Have a look at my figs

    The 12k flat is in a working class area and ex Local authority  and its made more than the Penthouse in a swish area

    The North again turns the Norm upside down

    Its all down to areas  again


    0
    0

    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    Not sure what to say to this. I think you missed my point. Which is really about if you invest the same amount. Are there better returns in different areas. I’d welcome your thoughts on whether holiday lets are genuinely better for growth? I would have thought  lack of supply would in theory drive prices higher l...
    0
    0

    Ah V but you have to compare like with like

    Total appreciation on A 400K property  or 10 x 40K properties

    Its the same

    But  the 400K could be in a poor area and the 40K one in a wealthy area or vice versa ... 

    which is what Mr Paye is getting at I believe  

    So that  area may affect the capital appreciation positively or negatively


    4
    0

    Jonathan Clarke. http://www.buytoletmk.com

    Thats a very interesting question

    I will kick this off with a few historic prices

    in 1988 I was looking to buy some property and I had two choices and two areas

    one was up and coming a penthouse flat built on the river front plus a Marina Mrs Thatcher opened the development  the Penthouse

    flats were selling for 99K each

    My other choice was to buy a number of small two bed flats for 12k each

    If I compare the prices today the Penthouse is now £250,000

    The two Bed flat is £75,000

    you can see the lower priced property in a worse area has made more than the Penthouse in a Marina

    https://www.rightmove.co.uk/property-for...85225.html

    0
    0

    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    Thanks DL. That’s interesting. I wonder if your example is in part due to one being a new build?
    0
    0

    It was a new build and i think that is a factor

    But If I look at other projects its been a similier outcome over 25 years

    The North East  is a Odd place compared with the rest of the UK

    I think its a market of its own with very different out comes

    This is why I model my new company and a supermarket

    Its what I sell every day which is most important I call it the baked beans (Yeild)

    The value of the building is not my priority  I know over time it will make money just like the Penthouse flat

    But its not my driving force to be honest

    I think the SE landlord would look on there business in a very different way

    The more I blogg the more I see the differences

    Maybe I should write a book called the Northern Landlord  Handbook

    I dont think the NE is alone I think you would find lots of areas very different from the SE.

    0
    0

    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    This is not a phenomenon associated with just the NE

    In the SE I had 1 beds in a poor area  that quadrupled  whilst a 3 bed in a decent area only doubled

    Likewise i had studios in poor areas that tripled in the same time span

    These anomalies will be found in all parts of the countries

    And vice versa in some areas the wealthy ares will take off  on a steeper incline disproportionately to the poor areas which become possibly no go areas and get boarded up and lose loads of value like a mobile home or car  . They will remain that way until the government cash is there for regeneration

    The skill is spotting the undervalued houses, streets , estates, districts, towns  local to you which are likely to become in time valued ares

    This is done only by intensive DD  and some good fortune

    I have several on an estate which is being regenerated . I will do well out of it

    But that is good fortune .

    My DD when i bought them 20 years ago didn`t spot this possibility

    What i did spot though was they were undervalued compared to the estates in the vicinity

    0
    0

    Jonathan Clarke. http://www.buytoletmk.com

    In similar vein DL - Sovereign Harbour development in Eastbourne has performed poorly.

    0
    0