Cheltenham and Gloucester Property Market – What is going to happen in 2015?

I had an interesting chat with a landlord who uses another letting agent in Cheltenham after he popped into our office. We got taking about both the Cheltenham and Gloucester property markets, as he lived in Cheltenham but most of his buy to let properties were in Churchdown and Gloucester and thought other homeowners and landlords might be interested. Whilst the housing markets are so different, with average property prices being almost 50% more in Cheltenham (the average value of a property in Cheltenham is £302,900 compared to Gloucester’s at £204,700), there are a lot of similarities between the two place’s property markets.

You see, property values didn’t stop dropping in Cheltenham and Gloucester until December 2011 (and if I am being honest, there was a very minor dip around Christmas of 2012), so after a strong run over the last 23 months (starting in January 2013), the ever upward drive of house price rises has started to turn with increases now at an almost standstill for the first time since the start of 2013. Now it could be said this easing of the housing market in Cheltenham and Gloucester can be attributed partly to the time of year (in 2013 property values in Cheltenham and Gloucester dropped by 0.1% in November), it is obvious that estate agents in Cheltenham and Gloucester are wary about the direction of the market as a result of the not as strong demand and fewer house sales.

With the uncertainty of a possible interest rate rise, new mortgage rules, a general election on the horizon and recent warnings of a house price bubble. Although the main indicators suggest that buyers will start to gain the upper hand, especially with the new stamp duty rules announced recently by George Osbourne. However, there are many homeowners who don’t need to sell and won’t bother unless it’s economically beneficial to do so, but most homeowners are homebuyers, so what they loose with one they gain with another.

On the one hand going for high yielding Cheltenham and Gloucester property to rent out seems an obvious choice (in say Barton, Matson and Whaddon) but high yielding property often doesn’t go up in value that well and in some circumstances doesn’t keep up with inflation, meaning in real terms you have a depreciating. So surely you should pick a property that has great capital growth then, because of the obvious potential to generate long term capital profit, especially with inflation eating away at our savings. However, rental yields on high capital growth properties (in areas such as Charlton Kings, Prestbury and Upton Saint Leonards) tend to be low meaning if you are taking a high percentage mortgage, the rent doesn’t pay the mortgage payments.

This is all good news for landlords looking to buy rental property with the changes in stamp duty and later in 2015, the new rules regarding pensions, where you will be able to take money out of your pension pot to invest in property. However, at the same time, I would say don’t just buy any old property in Cheltenham and Gloucester. First time landlords need to be cautious. The doubling of house prices every seven to ten years which has taken place since WW2 doesn’t seem to have been seen since the mid 2000’s. The property market is shifting with more properties being built and restrictions put on mortgage lending, the likelihood of the property market increasing at the same levels as the past is questionable. But investing in property is also about receiving the rent.

If you want to chat about property investment in the either Cheltenham or Gloucester, either pop into our offices on Bath Road in Cheltenham or Worcester Street in Gloucester or email direct on neil.west@belvoir.co.uk  and I look forward to speaking to you soon