Where should I buy my next property? Brixton or Clapham? How many bedrooms? House or flat?

So, another profitable year draws to a close. We all know that very little happens in the property market in these last few months of the year, so now is probably a good time to recap on what’s happened locally. It’s also a brilliant time to set your goals for 2016. How many properties are you planning on buying? Refinancing? Refurbishing? Adding value to?

Let’s look at some numbers I’ve compiled, courtesy of Zoopla. My main aim is to point out areas of good growth for you, the investor.

	Brixton SW2	Clapham SW4
Average Value	£496,886 up 5.22%	£843,777 up 6.74% (12m)
Flats	£405,081 up 4.96%	£566,979 up 5.36% (12m)
Terraced	£738,939 up 7.41%	£1,344,463 up 7.95% (12m)
Semi D	£914,410 up 0.66%	£1,808,612 up 0.66% (12m)
Average Rent	£1,822pcm	£2,141pcm
Average gross yield	4.4%	3%
Number of transactions	542	445

This table certainly makes interesting reading. On the face of it you’d be inclined to buy in Clapham straight away (average values up), but there are certainly advantages to both areas. For one, you can see that the average gross yield in Brixton is nearly 50% more than in Clapham! So rents are much greater in relation to the purchase price. That’s a good thing, because that will make up for the slightly slower house price growth we’ve seen compared to Clapham over the last 12 months. Also interesting to note is that terraced houses are absolutely unaffordable as a buy-to-let, with vastly diminishing yields, only made good by the increase in capital value.

Should I buy in Brixton or Clapham?

Well that depends. Historically we can see that both are good bets. But decide what you are going for: capital appreciation, on the face of it, looks stronger in Clapham but rental yields are definitely better in Brixton. But let’s compare over a longer period. Queue a beautiful graph again courtesy of Zoopla. Now look at how SW2 prices are keeping pace with SW4. There is a difference. But the gap isn’t widening. So as far as investment goes I think Brixton has more to offer in terms of house price growth as gentrification increases and “Brixton Villaaaage” becomes even more popular.

So we’ve decided that Brixton has the best yields and best potential based on historic data and trends. Which property is doing well? 1beds? 2beds? No, it’s actually 3beds which are doing the best. They are still relatively affordable (a big word in London of course) and command the best rents as a percentage of purchase price. Also personal experience tells me that they are ALWAYS in good demand.

   

SW2		1 bed	2 beds	3 beds	4 beds	5 beds
Houses	Value	£385,000	£517,492	£705,702	£1,073,638	£1,238,325
	Rent	£901	£1,807	£2,440	£2,977	£3,398
	Yield	2.81%	4.19%	4.15%	3.33%	3.29%
Flats	Value	£372,569	£512,683	£595,585	£514,544	-
	Rent	£1,280	£1,652	£2,970	£2,743
	Yield	4.12%	3.87%	5.98%	6.40%
All	Value	£372,958	£513,387	£635,820	£929,871	£1,238,325
	Rent	£1,263	£1,661	£2,872	£2,919	£3,398
	Yield	4.06%	3.88%	5.42%	3.77%	3.29%

SW4		1 bed	2 beds	3 beds	4 beds	5 beds
Houses	Value	£499,950	£873,000	£879,988	£1,456,663	£2,506,250
	Rent	£1,077	£2,136	£3,656	£4,444	£4,695
	Yield	2.59%	2.94%	4.99%	3.66%	2.25%
Flats	Value	£508,714	£702,250	£762,349	£1,071,000
	Rent	£1,581	£1,970	£2,321	£3,049
	Yield	3.73%	3.37%	3.65%	3.42%
All	Value	£508,412	£713,195	£787,115	£1,360,248	£2,506,250
	Rent	£1,564	£1,978	£2,714	£3,921	£4,695
	Yield	3.69%	3.33%	4.14%	3.46%	2.25%

Interesting to see that 3 bed flats are offering a near 6% yield in Brixton. Tell me it isn’t so, my chants in April of three bed flats in SW2 being a good bet were fairly accurate.

So if you want more advice on what to buy, where to buy it and when – just drop me a line on jeroen@claphampropertyblog.com. Helping landlords make wise investments now and in 2016.