The national news media love to tell horror stories about what’s happening to property prices and rents across the UK. The problem with this is that it rarely has any relevance to an individual town or city, such as Plymouth.
That’s because property prices and rents vary dramatically and few can be considered as ‘average’. Much of this variation is down to what is happening in the local economy, and Plymouth is hardly ‘average’ when it comes to how well the economy is performing.
Of course the big difference to other areas across the UK is that Plymouth’s economy in the past used to be driven by its coastal connections - including an amazing naval heritage. And, although employment in this sector and the dockyard has reduced, they still influence the jobs and money people earn to put a roof over their heads.
We know from researching rents over the last decade that they tend to rise and fall depending on what happens to wages and whether they are rising above the cost of living (inflation). In the main, rents rose during 2008 when property prices started to fall as demand for rental accommodation went up. The market was then flooded with properties which couldn’t be sold and supply quickly increased versus rental demand, reducing rents.
After this, with wages either not rising at all or growing at 1-2% versus inflation increases at one point reaching 5.1% (September 2011), this meant people just didn’t have the money to pay for rent rises, so, in the main they flat lined until the general economy picked up post 2013.
Moving forward, the forecast for rental growth is good, both nationally and for Plymouth. Currently the area is considered “a centre for excellence” for marine science and manufacturing. It has the largest science park and hospital in the South West peninsula and is looking to expand its knowledge-based economy too. All of these sectors can create well paid jobs and the more people are paid, the more rent they can afford.
In addition the area has three universities, which helps boost growth potential from a talented pool of young professionals – all of whom want a decent roof over their heads.
With a mean wage for Plymouth of £29,258 per annum and the unemployment rate of 4.1% being lower than the UK, this all suggests a good opportunity for rents to help boost yields by continuing to rise into the future.
If you are thinking about or are already investing in Plymouth, it’s worth understanding what’s happening in the local economy as this will influence the rents and property prices people are able and willing to pay. As Northwood know the Plymouth area so well, we can help evaluate any property opportunities you are considering and which of your existing properties will deliver the returns you are looking for into the future.
Northwood are the UK's No 1 Provider of Guaranteed Rent. If you currently are a landlord or are thinking of letting out your property and are interested in a fixed regular income click HERE to get an approximate net rental income figure for your property.