Things are looking up for North Down and Ards residential lets
The North Down and Ards area is currently experiencing an incredibly buoyant residential buy to let market, with Newtownards and Bangor seeing levels of demand for properties not recorded since before the property crash.
Good quality rentals are being let in a matter of days. Highly sought-after areas such as Bangor West and Ballyholme have seen the average rent increase by as much as £100 per month compared with just a few years ago.
Average lease periods are now starting to increase from a standard six-month tenancy to one to two years which further demonstrates the strength of the sector.
We have noted an increase in investor activity, with some mortgaging and others using savings to fund purchases. With interest rates still low, investment returns of around 6% are typical and attractive in addition to capital growth.
Recently we have also seen growing demand from buyers seeking to secure unique properties such as those with sea views, period features or close to town centres. These are often bought to rent out on a short-term basis, for example to the holiday market.
While the return on this type of short-term letting may be substantial this should be weighed up against the increased risk, workload and wear and tear to the property.
The residential sector in the North Down and Ards area is also performing well. This is in line with the latest findings of the RICS and Ulster Bank Residential Survey which showed that the balance of surveyors saying that prices rose in the past three months was significantly higher in Northern Ireland than the UK average.
There seems to be a trend for purchasers moving away from the 'fixer-uppers', preferring new or recently renovated properties. As the cost of building, labour and materials continues to rise we predict this trend to continue.
Our own survey division has reported that some potential purchasers are very wary of having to carry out improvement or upgrading works and are opting to withdraw from the purchase rather than renegotiating the price to reflect the cost and inconvenience of the works.
The number of new build properties is increasing and all are coming with a turnkey finish but there is still strong demand for existing housing stock. New developments often tend to be built on the outskirts of towns and further away from schools, shops and other amenities. Other buyers favour properties close to these amenities, so all in all a relatively balanced market is maintained.
The commercial sector in our area is seeing more challenges. Shorter term leases, break clauses and landlord incentives are the order of the day in most provincial towns including Bangor and Newtownards. Rates, despite small business relief, still can be a hurdle to small start ups.
As is the trend across Northern Ireland we are observing that retail businesses are slowly on the decline and that service-based sectors are now moving into town centre locations. This trend is being helped by falling rents.
Interestingly, there is currently a strong demand for development land and sites, especially those with planning permission. We are averaging two or three calls a day from builders and developers seeking to re-enter the marketplace, so there is certainly a level of interest there which we haven't seen since before 2008.
Throughout the political, economic and social challenges over the last few years, agricultural land values have slowly but surely improved. It appears to be the only property sector which has avoided any impact from the historic property downturn.
As yet, Brexit does not appear to be having any negative impact on land values in the North Down and Ards areas. Currently demand remains high and supply low and as long as that continues the land market will remain stable.
Like the rest of our colleagues working across Northern Ireland we know that it is early days in the withdrawal process and only time will tell what the true impact of leaving the EU will be on each property sector.
- RICS member Tom Drumgoole is a partner and chartered valuation surveyor at Neill Estate Agents