Capital Appreciation In Swansea

Most people overlook Wales as an area to invest in because they don't see the benefits of investing in the cities where the values of properties are rising significantly.

In many areas of the North of England you can pick up properties very cheaply and make a rental profit on them which is of course great but only 1 stream of income. 

Properties in the Welsh valleys and rural areas are similar in that they flow cash but won't appreciate too much over time.

However, in the cities of the South of Wales there is some magic happening that not too many people are aware of.  It is a widely spread gambit that the value of a property will double every 20 years or so and has done since the dawn of time. 

Often this is true, sometimes it isn't, you still have to select your areas carefully and with due diligence.

In Swansea right now there are areas where you can get sub £100k homes that have more than trebled in value in the last 20 years.

Swansea is an upcoming city great for property investors

And that's just the beginning.

If you download our 21 Point Property Checklist you will see that the first 2 sections are all about the location and area.

We look for developments, movements, planning, local sentiment and most importantly compression.

Swansea is a compressed place, not only is it a beautiful place to visit with a stunning beach not far from attractions such as The Mumbles and The Gower but on the other side it has rough terrain that soon develops into the stereotypical Welsh mountains.

In areas of high compression you get property and rental value growth as competition for spaces hots up.

You can see this in the developments that the local government is making, new buildings, road upgrades, planned developments, new housing estates and much much more.

You can also see this in the above average house prices of the last 20 years and you can see it happening into the future as people all over the world migrate into cities en masse.

Swansea is no different, surrounded by rural areas whose towns often contain one or two employers that the entire micro economy hinges on.

In fact Swansea is the place that my piece on how to make £50k on a £100k property and take all of your money out in 36 months or less was written.

Click here or on the image below to read more about the exact numbers behind achieving that.

The rental market is squeezed.

The property market is squeezed.

And there are still great property deals to be had.

There's talk of a world leading tidal lagoon being built in Swansea Bay that would suddenly make Swansea a critical infrastructure point of the entire U.K. and at the time of writing, the U.K's future power output plans have been thrown into turmoil by Hitachi pulling the plug on the development of a nuclear power station on Anglesey:


The proposed Swansea tidal lagoon wall

There are of course areas of Swansea to avoid, like anywhere else, it has its own micro climates but in general it is on the up.  

If you bought a straight buy to let rental property today in Swansea it wouldn't be unreasonable to say you could expect to increase the rents by 3% every year.

If it rented for £600 pcm and cost you £400 pcm in total you'd be making £200 / month and 50% profit on your ongoing costs.

Raise the rent every year by just 3% because you purchased in a high compression area where development is strong and at the end of year 10 you're charging £806 / month for the same place and are making over 100% profit on your ongoing monthly costs.

Because you made the smart choice to invest in the right place.

Then add capital appreciation into the mix.

If your property was worth £100k it should be worth £150k in 10 years?

Well, maybe not, 20 years accounts for a % increase every year which is accelerated the further you get along the path and also accounts for boom/bust cycles which can affect 10 year growth.

But it almost certainly would've cleared 25% appreciation if you picked the right area.

That's £25k for free that you won't get from the north of England or the Welsh valleys, and you still flowed cash in the middle... and because you picked an area of strong growth the rents rose throughout the period too.

Why invest in Swansea?

Because it has a beautiful balance of relatively cheap properties rising in value, a compressed and pressurised area and prices rising fast in many areas.

There's not too many places in the entire U.K. you could say that about today...

But if you can, let me know in the comments below ?

Take a look at our other articles from our series on investing in Swansea

How We Source Properties For Investors
Key Properties Uk Sources Properties for investors with great yields and multiple exit strategies.One of the standard methods we use[...]
Swansea In The UK Property Market
According to the Property Industry Eye (using data from Halifax) Swansea is the number one place in Wales for house[...]
Swansea Statistics
Wales is 8005.8 square miles and has a population of 3,063,456 people (as of 2011)http://en.wikipedia.org/wiki/Demography_Of_WalesOf which 241,300 of those live[...]
Business In Swansea
Swansea is served by some of the UK's largest and most prestigious businesses including government organisations such as the DVLA.Given[...]
Swansea Transport Links
Swansea is a major hub of Wales, it's 2nd city.It's geography means that it is the only viable location to[...]
Amenities In Swansea
Swansea is not just a place that meets economic and property desirables for investment, it's also a desirable place to[...]

About the Author Martin Howard

Hi, I'm Martin Howard and I authored this article. I lead up the Key Properties group, we are a sourcing, development, estate and letting agents that operates mostly in South Wales. We typically over achieve on our projects and deliver great returns to our investors. Email me: martin@keypropertiesuk.co.uk if you want to chat or WhatsApp, call or message 07851 873995. Thank you for reading 😀😀

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