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Wednesday, July 30, 2014

Capital growth still out-weighs yields for me

Not all of the UK has been bathed in sunshine when it comes to their property prices. The old northern industrial towns such as Doncaster have remained very much in the shade, and any shoots of recovery remain shriveled and starved of the light emulating out from the capital.
According to this Mail article, Doncaster's property prices are lower than they were ten years ago. The average house price in the town is just £95,869, compared to its 2007 peak of £118,686.

This got me thinking about investment returns and the balance between rental yields and capital growth.

I was recently surprised by the small differential in the latest rental yields across the regions - with less than one percent dividing the highest, the 6.4 percent in the North West, and the lowest, 5.5 percent in Central London.

It strikes me that buying in the area with the strongest potential for capital growth is key for investors to make decent returns.

I'm sad to say that many of those old industrial northern towns don't sing out with future prosperity to me, and though they may offer slightly better rental yields, I can't see them ever performing that well where it really counts - in capital growth.

Look to the prosperous towns and cities to make the most of your long term property investments.

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