Moving from a 2 bed to a 3 bed property may only cost an extra £411 pm
Market Comment from Lee Fenn-Tripp Director of Downer & Co
Moving to a bigger home is something Newbury people with growing young families aspire to. Many people in two bedroom homes move to a three-bedroom home and some even make the jump to a four-bed home. Bigger homes, especially three-bed Newbury homes are much in demand and it can be a rewarding move.
If you live in Newbury in a two-bedroom property and wish to move to a three-bedroom house in Newbury, you would need to spend an additional £104,076 (or £411 pm in mortgage payments (based on the UK Bank average standard variable rate 4.74% – cheaper can be achieved)). If you live in Newbury in a two-bedroom property and wish to move to a four-bedroom house, you would need to spend an additional £178,073 or £976.45 pm in mortgage payments. However, going straight to a four bed from a two-bed home is quite rare as most people jump from a two to three-bedroom home, then later in life, from a three to four-bedroom home.
So, after being asked my thoughts on moving home in Newbury by a friend recently, please find my analysis of the local property market and then some thoughts. To start with, let us see what the average property price is for a Newbury property by the number of bedrooms it has.
I then decided to calculate what it would cost to make the jump upmarket from one bedroom to two bedrooms, two to three bedrooms etc, etc, both in actual money and in mortgage payments (using the current standard variable rate of UK Banks of 4.74% – so the mortgage cost could be higher or lower depending on the mortgage taken).
There are some interesting jumps in costs when moving upmarket as a Newbury buyer. The cost of moving from one to two beds, and two to three beds is relatively reasonable, whilst the jump from three to four beds in Newbury is a little higher.
As an aside, there is a lesson here for all my blog readers. You can quite clearly see why the larger 4 and 5 bed properties don’t offer the best returns for buy to let. Simply put the monthly finance costs and rents achieved don’t match up as well (i.e. a mortgage for a 4 bed home in Newbury would cost you 39.34% more compared to a 3 bed mortgage, but the jump in rent would be a lot less than that). I don’t wish to be dismissive about the solidity of investing in larger properties because it does depend on your circumstances. Four bedroom properties sometimes offer other advantages. Pick up the phone if you want to know what they are in more detail.
A further look at the stock of properties in Newbury is revealing.
The most active purchasers are 30 something home-owning parents with growing families. Many look to more modern developments for the perfect balance of access to decent primary schools, commutability and lifestyle. For landlords looking to buy within Newbury, they face stiff competition from these 30 something families, making the three bedroom Newbury home massively in demand, often attracting spirited offers and selling within weeks of listing.
Yet, the cost of an additional bedroom can be too much for some Newbury buyers. It is quite challenging moving home the first time, but to then find you are priced out on the next move up the ladder can be quite disconcerting, with families sometimes having to move to a different part of the country to get the bigger home they need.
To those buying their home for the first time, all I suggest is they not only consider the mortgage payments and other costs of their first home, but also do their homework into their next rung up the Newbury property ladder. Thinking about it now will keep you ahead of the game in the future; as your number of bedrooms, family property needs and lifestyle wants change.
..and Newbury landlords – well these changes in the way people live also mean there are opportunities to be had in the Newbury rental market. Many Newbury landlords are starting to pick my brain on this, so if you don’t want to miss out – drop me a line, visit www.newburypropertynews.co.uk view our pages on Facebook or pop into our office in Cheap Street in Newbury
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