Gloucester and Cheltenham .. good time to buy property?

Following last week’s article, I had an interesting chat with a chap who lives in Churchdown. He is thinking of buying his first buy to let property and he wanted my opinion on the state of the market and whether it was a good time to invest.

He was particularly worried that with all the newspaper headlines of a booming housing market, there wouldn't be any demand by tenants. One of the best pieces of advice I can give to those looking to invest in property is a simple trick of the trade. You can judge the affordability of an area’s property market (and thus how much demand there could be) by simply finding the ratio of the average property price to the average salary. The lower the ratio, the more affordable property is. When we put this to the test, we found that Gloucester currently has an average property value of around £192,200 with the average salary being £28,288 per year. This is a ratio of 1 to 6.79. Meanwhile in Cheltenham, the ratio of property values to salary is 1 to 7.53 (as average salaries are £37,744 and values £284,500).

All these ratios are very fair, compared with other parts of the UK, but that doesn’t  tell the whole story. On these sorts of figures, that would mean a first time buyer would need to have a salary of £57,000pa to buy an average property in Cheltenham and £38,000pa in Cheltenham.

However, the issue isn’t affordability, it’s the raising of the 5% deposit, which when you add buying fees and costs, will be in the order of between £12,000 and £16,000. Tenant’s inability to raise that sort of money for the deposit is driving demand for rental property. If you would like some advice about buying to let, be you a landlord with a portfolio or someone thinking of investing in the Cheltenham or Gloucester rental market, please email me on  neil.west@belvoirlettings.com