Average property values are now £156,887, compared with £137,112 in May 2004, representing a 14.4per cent increase over the past 12 months.
This rise is attributable in particular to an increase in activity among large-scale landlords acquiring additional student lets in advance of the new academic year starting in September.
John Heron, managing director of Paragon Mortgages, comments: “We’ve seen landlords buying properties in several of the UK’s university towns, particularly in the northern half of the country. To meet the needs of student sharers, landlords typically buy larger properties with four or more bedrooms which, of course, tend to be more expensive than medium sized properties for occupation by families. This growth in buying activity among landlords specialising in the student market accounts for the significant rise in average property values recorded this month.
“A significant number of landlords concentrate on the student market, with many university towns and cities experiencing a shortage of decent accommodation for students. With four or five student sharers in a property, the return to the landlord can often be very attractive.”
Investors located in the northern regions of the country continue to benefit from higher average total returns than those in southern parts. In Yorkshire, average returns are 56.2per cent, while in the North West they are 44.6 per cent. The North and Wales have overtaken the East Midlands this month with overall returns of 33.0 per cent and 28.2 per cent respectively.
As well as seeing high levels of capital appreciation, eight out of ten regions saw rental incomes rise this month. The West Midlands and the North experienced the largest increases in rental incomes, reaching averages of £8,067 and £5,981 respectively. Despite this month’s increase, however, rental incomes in the North are still the lowest in the country. Across the country, average rental incomes are currently £10,534, representing an increase of 6.8 per cent over the past year.