Today we look at a few, specific postcodes in Newcastle upon Tyne to see where in e city would be best to invest in property based on historical data, house value and demand. The property market in Newcastle is fantastic, offering great yields and with a huge amount of potential for growth.
Hello everyone, and welcome to our Buy-To-Let Hotspot series. In today's video, we're going to be looking at Newcastle, as a location, to try and understand if Newcastle has been performing recently and also has the potential to perform, going forward, as a good, solid area for buy-to-lets.
There are about eight different postcodes, in general, that make up the main city centre of Newcastle and the close-by, surrounding areas. We have identified five, in total that look really promising from a data perspective and we'll go into the detail in our Hotspot series and show exactly what data sets we're using, exactly what sort of leading indicators we look at and why that should, hopefully, showcase some potential, going forward, as a buy-to-let area.
Now, there's a couple of key things to consider with this video. It's not intended as financial advice. It's also not intended to say, look, here's a location that's definitely going to perform in the future. There are lots of things that will change the dynamic of that. We can never guarantee anything, unfortunately.
What we do hope to show you is third-party data sets. We use websites like Zoopla, Home and Mouseprice. So, some very good, solid, robust websites that show data from a whole host of different sources. And indicators, like house price growth, the recent speed of property sales, and market values, currently, things like that.
We look at a 12-month, 5-year and 10-year timeframe, as well. So, hopefully with a combination of different data and with some of our indicators that we internally use as a team, you will get a feel as to what that location might look like and then also what sort of postcodes are performing very well.
At the end of this video, we'll also wrap it up and show you a development and opportunity for buy-to-let that you can consider in these particular postcodes, straightaway.
So, if you are looking for property investments, currently, if you are looking to add to your buy-to-let portfolio, we'll show you, at the end of the video, a way to do that. There will be a link below this video that you can click on. It'll give you more information about a live property deal, and then also we'll give you some other links that show you exactly the websites and tools that we use.
Out of those eight postcodes, five of them, as we said, are performing quite well. There are outliers to that, though. Some of these postcards, although they perform quite well, currently, or historically, may not go on, in the future, to deliver.
So, you do need to consider that. You do need to look at different data sets, as well, if you wanted to, for your own due diligence, and then also look at things like individual property developments. Just because one area is performing very well, it doesn't mean that a particular development is going to deliver, in that location.
So, make sure you do your research on any properties you are considering. Hopefully, combined with this sort of data that we can show you in our Hotspot series, it will give you a good flavour as to whether that location can perform or not.
So, we'll go straight into the detail, and as always, any questions, don't hesitate to ask. I look forward to showing you what Newcastle, hopefully, has to offer. All the best.
So, we're gonna be looking at a couple of different websites in today's video, mainly the property-type websites, to get a flavour of the data, but also an indication of what the local tourist board is showing and also what Google Images is showing.
I quite like this. It gives us a good idea as to what that location is famous for if you have not heard of it before, if you are new to the area, or if you are considering a new location and you want to get an idea as to what that area is all about.
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So, you have got here, world-class culture, vibrant nightlife, award-winning dining, inspiring heritage, certainly got that. There's a couple of times that I have visited Newcastle. Really good spot. There are lots of things to do. Great for tourism. Really good for local homeowners and industry is growing there as well. There are a couple of developments that are going up in that area, with some good investment.
So, that's an idea as to what the main website is showing, from the tourist board point of view.
Images, it's always good to Google images for an area. It gives you an idea as to what that location looks like, certainly, if you've never been on the ground or visited the location. It gives you a bit of an indication as to what to expect.
Then, next up, we're going to be looking at some of the websites to show you exactly what the information will show.
Now, if this is the first time you've seen any of the Buy-To-Let Hotspot series that we do, I'll just give you a very quick rundown on the data set.
This spreadsheet, we have available in our VIP training. It's not currently available, live on our website, but I can show you on this video, certainly for this area.
In the spreadsheet, we have lots of different locations that are covered. We are currently filming this in October 2018 for Newcastle, but we do have lots of other areas that show on the spreadsheets, as well, if you are a VIP training member.
For this particular location, though, we have 8 postcodes listed for Newcastle. When we've highlighted either orange or blue, they are locations and postcodes that show a lot of promise.
So, we'll go into the detail in a second, but if you're wanting a quick rundown... 1, 5, 6, 7 and 8 look quite good, from what the data suggests. 2, 3, and 4 all fall down on a couple of points, so we've not highlighted those, as of right now, as potential locations, for us anyway, to look at and consider, further.
Once we've looked at the data, there's a couple of key considerations to think on.
First of all, the websites that we use, Zoopla, Home and Mouseprice. They all look at data slightly differently. So, we're gonna look at each website for a slightly different reason.
First of all, Mouseprice.com, the main reason for looking at this site, here, is to try and understand what the location is like from a heatmap perspective.
We've talked about heatmaps quite a bit, on the site, and we looked at different locations and what the heatmaps show. I quite like Mouseprice for their heatmap, initially, when we're looking at a larger area because the colour difference is a lot easier to see, at a snapshot than the Zoopla heatmaps and heatmaps on some of the other websites.
So, you can see here Newcastle upon Tyne, the city centre, there are some quite high-value locations nearby, which is always a good sign. So, we like to see that. It just gives us an idea of potential over-spill, as the location grows and develops, for prices to increase into these slightly lower value locations.
Dark blue tends to be lower value areas. Dark red, higher value areas. So, we wanna stick at light blue. Green locations tend to deliver quite good, strong yields but close by, hopefully, to these oranges and reds.
So, first of all, Newcastle would be an area that we would consider further, based upon its location heatmap.
Next up, we want to look at each, individual postcode. So, we can look at individual postcode heatmaps and then also individual, postcode data.
We'll go back and forth from the actual spreadsheets through to the website just to show you exactly what we're looking at, here.
But on the spreadsheet, Newcastle passes the first heatmap test, and then we're looking at postcodes that pass the secondary heatmap test.
All of these postcodes... I won't go through every single one, but I'll show you the premise of what we look for so you can, certainly, follow that trend yourself, if you'd like to, in any area, but also in Newcastle, if you wanna cross-reference the data.
NE4, here, is the only post code that doesn't really, for us, seem to deliver what we want, from a heatmap perspective.
To show you how we've got this, go to 'For Sale', 'Postcode'. I have just put in a minimum price of 50 million, and that's not because we're looking at properties up to or from the 50 million price range. It removes all of the drop points on the map. It's way cleaner and easier to have a look at that then, from a heatmap perspective.
So, NE1, you can see some dark red, some oranges here, and generally light blues for the rest of it, which is a good sign. That would pass the heatmap.
NE4, so, I'm looking at the postcodes, NE4 is the one, for us, that doesn't pass. I'll show you the difference between the two.
So, you are near the city centre, and you've got some darker reds and oranges not too far by. It's a very close call. There's no perfect scenario here. It's generally a gut instinct and a guide that you will find yourself.
So, you may be comfortable with these locations. You may be comfortable with what the heatmap is showing, for you. There are some oranges coming through, here, and some light blues. For us, there are just a few too many dark blue spots, and there's also, nearby, surrounding, for three-quarters of the location, generally, lower value areas.
So, for us, if we were looking at this postcode, we would want to be closer towards these sections in this part of town. As a general guide, just for our initial look at all the other heatmaps and locations, this particular one we've, currently anyway, put down as a no, for progressing further.
Value change, average price and capital growth
So, next up we're gonna be looking at a couple of key data sets: value change, average price, and then the growth, over a period of time.
So, the value change is going to be in relation to the market value. The average price is going to be in relation to the actual, physical, price paid, which is why you may see some high percentages, here, in terms of values increasing but then not much growth on a percentage basis or a physical pound basis, in these columns here.
Again, this is a guide, a rule of thumb. There's no definitive figure that you should be trying to identify that will, for definite, say this area is perfect. In a host of ways, there are always going to be risks, but we try and have these stop points that give us a better indication as to whether an area might perform, and this is when we've looked at locations across the UK, and these are the data sets that seem to give a strong, historic performance for that data set.
Historic performance, historic market growth, historic sale increases and current demand
So, our past levels, here... What we're looking at are high-value areas or close by, and that's where the heat maps come in.
Then we're looking at 18%, or above, in the last five years, of a value change. So, we have 12 months, 5 years, and 10 years as a data set, here, and then that gives us a pound and also a percentage figure.
So, this is in reference to this column, here. So, over the last five years, value change, we're looking at 18% or above.
So, Newcastle, as a general area, has performed better than that, which is good, 22%. NE1, NE5, NE6, NE7, and NE8, all pass that. So do these two postcodes, here, NE3 and NE4. So, in theory, they would pass this initial test, and also if they pass this test, that's great.
But what we're actually looking for is... There are 4 metrics in total. We want a minimum of 3, to be achieved. If an area only achieves 2, then it doesn't get highlighted from our stages, as a location that we want to be looking at, further. If it achieves 4, that's great. It gets highlighted in blue.
So NE2, 3 and 4 only pass 1 or 2 or none of the initial criteria, so that's why they are not highlighted.
Now, where we got this data from is Zoopla. So, if we go here, 'House Prices', put in your postcode, so, we are looking at NE1. Then the first page that will be coming up, here, is your market activity. At the top of this page, all your data is easily laid out for you, here so you can see your value change, you can see your percentage increase, and then you can also see your average price paid. This is in reference to a 12-month timeframe. You can change the timeframe here, 5 years.
So, you don't have to get all fancy and put it into a spreadsheet, you can just simply look at this data, here. If you wanna use the same criteria as us, NE1, last five years, value change, 18% or above, it just kinda squeaks in. For us, a positive sign is 18%+, so that would pass that criterion.
So, this is where we getting the data that is populating this element of the spreadsheet.
Good value change, in the last five years, is a good indication that, hopefully, the area may continue on that same trend, with all things are being equal, with population increases and investment in the area. They are key, leading indicators, that we've seen historic and recent and potential, future growth, all tend to follow.
It can be quite hard to get up-to-date datasets on population and also the investment in an area, so this trend, here, this data set, here, is just a lot easier to look at, really, and find.
Average price paid
Next up, we're looking at the average price paid, so we want a good increase in the average price paid on a property over the last 12 to 5 months.
The figure that we've set, internally, is a 5% or above increase. That is, as I've said, no guarantee. There is no set, industry standard here. It's just that this is the figure, internally, that we try and look at to see if it's going above.
So, Newcastle is an area just below that, but NE1 is performing very well, double that average price paid, in terms of growth, over the last 12 months to 5 years, which is good.
NE2 has slipped backwards, slightly, and you can see here the data that that's coming from. So, its average price paid was 280 over the last 5 years. Over the last 12 months, it was 272. Again, this is looking at data from Zoopla. This section here, the average price paid, and then you can set the timeframe.
So, it doesn't give you a percentage, unlike this value change, here, and the percentage, we've calculated on the spreadsheet. But 5%, or above, is the criteria that we're looking at.
This postcode here, NE6, fails that. So, we have not had a lot of value change or average price paid increase in the last 5 years to 12 months in NE6. But it surpasses all the other criteria. So, it has three areas where it passes: heat map, 5-year value change. It's below our criteria for average price paid, but then it's in our criteria for median selling time, which we'll go on to in a second.
But that's why that one (NE6) is still highlighted even though this column here has not passed that particular test.
The same, again, for NE8. NE7, above 5%, which is good. NE5, above 5%, and NE1, above 5% - performing very well in that respect.
The last criteria we're looking at is sale time.
Previously, we've been looking at historical performance, historic market growth and sale increases. What we want to also look at is what the actual, current level of demand is. The best way for us to see that, from our side, is with data using Home.co.uk, where we look at the actual selling time, on average, for a given postcode.
You can copy this URL, you can search on Home for selling times. It's relatively easy to find, and you can use any postcode you want, here.
We are looking at NE1, as an example.
There are lots of data here that you can play around with. Selling times by bedrooms, property type, price bands. We want to keep it simple. We just want to look at the overall selling time, in that postcode, for general properties.
This data is going to be skewed, somewhat. If you have a very small location where there are not many properties, it will give you, probably, an inaccurate view of the actual area-snapshot because you might have a property that performs very well or performs very badly compared to the local stats.
So, the larger the area, the better the data will be. The averaged-out data is going to give you a closer indication as to the possible likelihood of performance, in terms of speed of sale.
What we wanna be looking at here is the median selling time. We feel like that's a better data set to play with. You can see here, NE1 median selling time is 84 days. That just strips out any of the outliers from properties that perform really well and properties that take a long time to sell.
Then we are looking at, ideally, a sale time less than 60 days. That's usually a good indicator that the market, currently, is relatively buoyant.
There are lots of things that can affect this. Time of year, types of properties on the market. So, if you have an influx, maybe a new-build estate that's all 1-bedroom apartments or all 4-bedroom houses, that could change the selling time, significantly, for that snapshot of data. Because, effectively, what we're looking at, here, is over the last 90 days, in this area, for this number of properties that have actually sold.
So, you are looking at a smaller data set than any of the others that we were playing with, here.
60 days, though, gives us hopefully a good baseline. So, you can see NE1 takes a bit longer than that, 84 days, but it's still highlighted as a good location because it outperforms on all the other key criteria. So, the heat map is very good, value change in the last 5 years is good, the average price paid in the last 12 months to 5 years is good. It's double our baseline, and then the selling time is just a bit over that timeframe.
You have good selling times in NE6 and NE7, currently, which is good. Shows some quite active locations there.
Putting it all together
That's how we are looking at utilising these different data sets to try and understand what area might be a good hotspot to consider buying buy-to-let properties, in.
So, as you can see, NE1, 5, 6, 7, and 8 are performing quite well. We'll put a link below this video on the different websites that we use, so Home, Zoopla, and Mouseprice, and then also just Googling images and looking at the tourist information board, if you want some more information on that particular area, in terms of any local stats or data, certainly population, types of things to do, types of investment, going on their tourist information board, local council websites can be a great starting point for that.
And then also our team has been looking out for different options and opportunities within these postcode areas, so out of these postcodes, we've found there's a good site that seems to achieve all of the metrics that we look at, internally, in the NE1 postcode, in Newcastle.
As I said, there are a couple postcodes here that do seem to perform quite well but there is a particular site, in NE1, currently.
If you want any more information on that, there'll be a link below this video or a button. Simply click on that and that'll take you to a page or a site with a bit more information.
These aren't properties that we, ourselves, directly sell or are part of, in any way. They are just property opportunities that we have found, in relation to some of the companies that we work with as affiliates.
So, it might be a property crowdfunding company. It might be a buy-to-let master agent. There's a whole range of different property opportunities that our team look for. And then, when we find the right ones, we try and deliver them to our site visitors.
They are not properties, as I said, that we're directly selling, but they are ones that we can introduce you to, with other parties.
Hope that helps. I hope that gives you a good indication as to what the Newcastle area is performing like, at the moment. As always, if you've got any questions, don't hesitate to ask. All the best. Take care. Bye.