Is Reading ripe for property investment?

publication date: May 28, 2015
 | 
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books

Is Reading ripe for property investment?

 

Well as someone who has invested in Reading…I should know the answer to this! Interestingly the reason I invested in Reading was because my husband took a job down there and needed someone to stay. So we bought a two bed flat near the Shinfield Road and rented out a room up until a few years ago.

When my husband’s job changed, we rented the whole property out via a great scheme run by Wokingham Borough Council. We sent them some pictures of the flat, they passed them on to potential tenants on their waiting list and then we met them and chose the tenant ourselves. They were also helped with the deposit and we let slightly below market value to help the affordability.

And the investment has done very nicely. Overall, Reading property prices are above the national average, mainly because of the commutable distance to London. The average price nationally according to the Land Registry is currently £180,000, with the average price in Reading being just over £230,000.

From an average price increase overtime perspective, prices have increased on average by around 6% a year. But in Reading we’ve seen slightly slower annual growth of just over 5%. This is likely to be due to the huge range of property values ranging from cheaper council estates through to city centre build flats and multi million pound homes on the way out towards the even more expensive Henley on Thames!

So far for 2015, prices are performing well in Reading, with property prices consistently up 12% year on year for the last six months, which, versus the national average of 6.7% is great news for those who have already invested in the area. However, for those thinking of investing, prices can be considered to still be ‘good value’ as they are just 6% higher than the market height. This suggests there is still some growth in the area to be had.

And this is especially the case considering the growth expected for the region from a transport, population and economic perspective. There is a good skilled workforce and especially great access to international transport hubs (including Heathrow Airport) with successful businesses in ICT, Business & Financial Services, Energy & Renewables, Pharma – Bio, Defence and Cybernetics at the University of Reading (which happens to have the super housing expert Professor Michael Ball. Reading itself has been promoted by the ‘Centre for Cities’ experts who say it is one of the “five cities to watch…because they “will be better-insulated from the economic impact of the spending squeeze, and have high potential to create private sector jobs”.

It’s also hoped better infrastructure with nearly £1 billion of works on Reading Station and better access from the M4 via junction 11. In addition, there are plans for a new Green Park station which will be near to the Madejski Stadium, with construction expected to start in October 2016.

So with great jobs, additional infrastructure, it’s not a surprise that the population is expected to explode and although there is a good level of building new homes plans, it’s still not enough to keep up with demand, hence there is likely to be continued pressure on house prices. To date, population levels have increased by over 10% since mid-2005, but according the local paper, the number of dwellings has only increased by just over 2,700, although this rises if you include commercial to residential conversions too. Savills predict the South East area will increase in price over the next five years by just over 26%. A tidy return as long as you are gearing your investment.

From a rental perspective though as prices tend to increase faster than rents, it could be more difficult to make property deals stack up from a property investment and buy to let perspective. Average rents in Reading tend to be around £900 per month, a bit less if renting to those on benefits. The good news though is that rents tend to increase in line with inflation. According to the Belvoir Rental Index, rents have risen year on year by just over 3%, which is typically the same level as annual inflation over time.

As long as you can get a good deal to stack up which is in easy access of some of the new transport changes, the future for investing in Reading certainly looks bright!

For FREE, independent and up to date advice on Buying, Selling, Buy to Let or Renting a Property, sign up for FREE to Property Checklists. Join now to access our FREE property checklists, including:-

 


All our information is brought to you by Kate Faulkner, author of
Which? Property books and one of the UK's top property experts.
This website is Copyright © Designs on Property Ltd and
Propertychecklists.co.uk protected under UK and international law.