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Localised short-term downward trend


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Hi Property Hubbers!

My husband and I are soon to complete on our first property investment and are now looking for our second!

We have found a flat in a good area of Leeds that was part of a conversion development of a 19th century building, 3 years ago. The general market trend of the area has been steadily on the rise for the last 10 years but there has been a localised dip in the last 3 years, meaning the flat was bought 3 years ago for nearly £50 more than what it is on the market for now. We are looking to buy and hold following the BTL strategy. We don't see any problems with rental in this area and think this area of Leeds would also be a good investment for capital gains, but are now slightly hesitant after observing the drastic fall in price over the last 3 years. 

Should we be concerened about this drop or are we in a good position for more growth in the future? Could there be something we are missing that has caused this recent fall? Is it possible that the flats in the development were all sold above market value, therefore skewing the trend? Why would the seller be asking for a price that would mean such a large loss for them?

Thanks for any advice offered!

Catriona and Pete

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  • 2 weeks later...

Hey guys,

So the previous sold price 3 years previously was £50k less than the price you'd need to pay to buy it.... correct? If that's the case check out comparable properties to see if it's happening to everything in that area or if it's perhaps an outlier which could have a different reason for the drop (sold to family member for example).

If it's happening to everything in the same area then the only question I think you need to ask yourself, if you're planning to hold long term, is how good is the yield (rent vs purchase price). If the yield is good the drop wouldn't put me off.

Hope that helps.


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Thanks Dave!

To clarify, 3 years ago the flat was sold for 50K more than the price that it is currently on the market for (meaning the seller must be considering making a loss on the sale). There's not a lot of comparables in the area but the current asking price seems to be in line with most others - it looks like the flat was perhaps just sold at a premium/overpriced 3 years ago for some reason?! The yield looks good but just concered about the long term capital gains - all research suggests its got great opportunity for growth but just concerned that it hasn't performed well in the last 3 years at all!

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