Smart property investor could have made 2,200% profit

AFS Team·13 August 2013·3 min read
Smart property investor could have made 2,200% profit
Smart property investors starting with a £1 million fund in 1995 would have seen their money increase to £23 million if they had predicted the best places to invest every year.

Sticking with the best performing towns and cities would have returned a massive 2,200% profit, according to a study by property consultants Savills.

While just picking the best regions would still have given a 549% return on investment – or £5.5 million in cash.

The data comes from an analysis of Land Registry house sale figures for England and Wales between 1995 and 2012.

The average return for homes tracked by the Land Registry was 158%.

For regions, London was the top performer for 11 of the 18 years, while the worst performers were dotted around England and Wales, although the North East featured the most - seven times.

Targetting local markets, Kensington and Chelsea headed the list. The generally regarded deprived neighbourhood of Blaenau, Gwent, was both the best and worst performer. In 2004, the town had the highest average annual property price increase (43%) but in 2000, also had the worst annual decrease (4%).

Lucian Cook, director of residential research at Savills, said it was a question of picking the winning and losing regions over the housing market cycle.

“To have followed the strongest regional performances, would have meant focusing heavily on London in the early years of the recovery and skipping investment in the South East, then moving onto East of England and the East Midlands and North East.”

By picking the worst performing neighbourhoods, investors could have made a 68% loss on a £1m, leaving a property worth £324,000.

Although an investor would have made 5% gain over the period, the figures are not adjusted for inflation, which means that would have been a “real” term loss.

For the future, Cook said that London’s outperformance of the rest of the regions looked likely to continue.