Warrington rents have risen by 13.1% since 2005

The Warrington Property Market is a very interesting animal. It has been particularly fascinating over the last 12 years, when we consider what has happened to Warrington rents and house prices.

What impact does Brexit have on the Warrington property market?

I believe we must look what happened in the 2008/9 credit crunch (and what has happened since) to methodically judge the possible ramifications for long-term investors in the Warrington property market. An important, yet overlooked, measure is the performance of rental income VS house prices (i.e. the resultant yields over time).

In Warrington – notwithstanding a slight drop in 2008 and 2009 – property rentals have been gradually increasing. The income from rentals has been progressively increasing over the last 12 years. Today, they are 13.1% higher than they were at the beginning of 2005. In fact, over the last five years, the average growth has been 0.7% per annum.

From a landlord’s point of view, increase in average rental income is not to be sneered at. However, the observant readers will be noting that we are ignoring an important factor – our friend inflation.

Turn the clock back to 2005 for a moment. Say we have a property being rented for say £900 a month, which is still being rented at £900 a month today. While the landlord is not getting any less income, this £900 is no longer worth as much.

In 2005, £900 may have bought a two-week 4* holiday in Italy. However, holidays have increased in line with inflation (which has been 38.5% since 2005), so our holiday would cost today £1,246 (£900 + 38.5% inflation = £1,246). Therefore, the landlord could no longer afford the same holiday, even though having the same amount in pound notes from their rental property.

In real terms, this means Warrington landlords are worse off today when they receive their monthly rental income, than they were in 2005 by 25.4% (rents increased by 13.1% since 2005, less the 38.5% inflation since 2005 – net affect 25.4% drop) 

What about the value of capital growth in investment properties?

However, rental income is not the only way to generate money from property as property values can increase. Although in the short term, cash flows are diminishing, many Warrington landlords may be content to accept that for a colossal increase in capital value.

Property values in Warrington have risen by 16.4% since 2005

This equates to a 1.36% per annum increase over the last 12 years. It’s even more interesting that this includes the 2008/9 property crash. This will make those Warrington landlords and investors feel a little better about the information regarding rents after inflation.

Moving forward, the prospects of making easy money on buy to let in Warrington have diminished, when compared to 2005. Last decade, making money from buy to let was as easy as falling off a log – but not anymore.

It would be true to say, my rental income verses property prices study does lead to noteworthy thoughts. I am often asked to look at my landlord’s rental portfolios, to ascertain the spread of their investment across their multiple properties. It’s all about judging whether what you have will meet your needs of the investment in the future. It’s the balance of capital growth and yield whilst diversifying this risk.

If you are investing in the Warrington property market, do your homework and do it well. While some yields may look attractive, there are properties in many areas that do not have the solid rudiments in place to sustain them. If you are looking for capital growth, you might be surprised where the hidden gems really are. Take advice, even ask your agent for a portfolio analysis like I offer my landlords.

The clear majority of agents in Warrington will be able to give a detailed analysis of past and anticipated investment opportunity (especially the awful effect of inflation) on your portfolio. However, if they can’t help – well, you know where I am and the kettle is on! Email me on manoj@hamletwarrington.co.uk or call on 01925 235338. If you are in the area, feel free to pop into the office – we are based on 6 Bankside, Crosfield St, WA1 1UP. 

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