A landlord I know has owned a few properties on the ever popular Chatsworth Road (Croydon, CR0) for the last thirteen years. She came in to our office to discuss the rise and fall of property prices on the street and how this has affected her yield over the years.
In 2000, when she purchased her first property on Chatsworth Road, the average value of a flat on the street was £89,190 which had a sharp rise to £120,770 by 2002. This rise in value continued, with average values being £164,300 in 2004 and £171,390 in 2006.
At the height of the property boom in this area, a flat on Rose Street had an average value of £171,390 – £180,000. Then we hit the recession and this road was affected quite badly, which was quite a surprise to see, bearing in mind that is it so close to East Croydon Station. Values dropped to an average of £146,062 just 2 years later in 2008.
We found something else that was quite interesting. Just after the recession hit (infact just the next two – three years) a developer bought a few units on Chatsworth Road and developed them. Being new builds, they demanded a higher price than the rest of the road. It bought the average price of Chatsworth Road UP, compared to the rest of Croydon which was still affected by the recession. Prices on Chatsworth Road increased to £221,000! This would also have been due to the fact that there were very few other sales at the time.
Unfortunately for those new buyers, the values instantly decreased (although only slightly) to an average of £199,000 by 2012 and one buyer of that block sold off their flat making a loss. If that owner had waited just another 2 years, he would have seen a huge increase in his new investment.
By end of 2014, after a mini recovery in the market (and news of Westfields, the £1bn (yes, BILLION) redevelopment scheme, and the many new developments in full swing) the average price on Chatsworth Road, Croydon had increased to £264,190.
It was great to work out this information along side the landlord and she was very happy with her investment. We continued on to talk about the rental market in the area.
When she told me of the rents she had achieved on the street, they seem fairly stable over the thirteen years. In 2002-2003 the average rent was £520 per month and is now between £750-£900, dependant on the property’s accommodation. Therefore, a landlord could expect a respectable annual yield of around 4.35% on Chatsworth Road at the moment. Which is not great. It’s not even good really. But it is prime area for capital appreciation. When Westfields get’s completed this road will be the first to shoot right up in value. If you do not know it, it is a quiet side road, with on street parking (paid for), and within 3 minutes walk to East Croydon Station. It’s one of my favourite roads in Croydon, and evidently as is the landlords who came in for the chat.
If you would like some advice with your potential investment, please come and see us in our offices or give me a call on 0203 761 4332.