With the annual rental yields as they are and with development and regeneration re-invigorating the local economy, Stoke-on-Trent is one of the best areas (if not the best) in the UK in which to invest in property. Today, we look at five postcodes in the city and look at what the data says about the best areas in Stoke to be a landlord.
Transcript and Additional Notes
Hello, everyone, and welcome to today's addition to our Buy-To-Let Hotspot Series which is on Stoke-on-Trent. There are about five different postcodes in total that make-up Stoke-on-Trent. We're going to assess them and analyse them and show you four that we really like the look of, as showing good potential, going forward, for our buy-to-let opportunities.
That's the premise of these videos. We've done a couple of different Hotspot Series now in different locations, in Birmingham, Newcastle and some other areas. The idea is really to show you what the data is showing, what sort of locations to consider for your next buy-to-let and why. Then, when you wrap it up and you consider all these different locations, you start to get a feel as to which sorts of areas are performing, what areas have performed, historically, what they are currently showing, in terms of speed of sales and house-price, value growth.
We look at different datasets over a 12-month, 5-year, and 10-year timeframe. We use websites like Zoopla, Home and mouseprice.co.uk to give you a really robust and mixed viewpoint and mixed dataset that can show you what the different locations are performing like and show you, as well, what our current baselines, what our rules of thumb are, as a company, when we are selecting an area, what we want to see that data showing. Because it's great having data but you need to, obviously, have some way to parse that and look at that and see what that data is actually going to show you, going forward.
There's a couple of different considerations with this video. It's not intended as financial advice. It never can be, and it's not intended to say, this is an area that's going to perform well in the future, you must consider it. Because there are so many different variables that could change that. We just want to show you what the historic and current dataset is showing and why that is, potentially, something to consider and could, hopefully, potentially, show you some good leading indicators for future performances. It's just there's no guarantee, unfortunately.
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There will also be outliers. We analyse five different locations in Stoke-on-Trent and four of those look very good. But the one that we're not suggesting, or we're not showing as passing our initial datasets, may go on to perform brilliantly. So, there will be outliers that don't tend to fit the trend of the data. There will be properties as well that are outliers. So, that postcode might not perform very well, or a given postcode might perform brilliantly, but a particular property or particular development within that postcode may be overvalued, may not perform, may be problematic, for a whole host of reasons.
So, it's important to do local, due diligence on each individual property and development that you're considering. But hopefully, that, combined with something like this Hotspot Series, can show you whether that combination of property and location is, potentially, a good fit for what you're looking at, to grow your buy-to-let, property portfolio.
As well, at the end of this video, we'll show you or give you an option to opt-in for some further information on a particular live, ready-to-go, property deal or buy-to-let that's available in one of the postcodes that we have analysed. So, if you are looking to grow your property portfolio at the moment and you are maybe considering Stoke or you're interested in what Stoke has to offer, we'll show you all the data for Stoke and then we'll also give you an opportunity at the end of the video to get more information about a live, property deal.
Then there'll also be a button or a link below this video where you can do that or opt-in for more information. As always, any questions, don't hesitate to ask. I look forward to going in and showing you what that the data says about what Stoke-on-Trent is looking like as an area. All the best.
We'll get straight into it and show you the five postcodes that cover the main part of Stoke that we're going to be looking at today, as well as, obviously, the main websites that we use for the data and then also some other websites.
The Tourist Information Board, I think, is always a great starting point. If you're brand new to a location, if you're new to the UK, even, or you're new to a given area and you want to see what it's about, the Tourist Information Board is a great snapshot into what the local council think that a location should be perceived as, what they want to promote, what the area is about. Which you can see here, industrial heritage, artistic flair, very good central location near Manchester and the North West, Birmingham, not far away, London. On a good motorway network as well. You've got lots of information on the Tourist Information Board that you can get more of a flavour as to what Stoke is.
Secondary to that, Google Images is great as well. It gives you a good idea as to what the main pictures are showing up as, for that location. Historic buildings, places to go and see, things to do. So, they're good starting points.
From there, we then look at four main websites or three main websites: Mouseprice, Zoopla and Home. Then we've got, here, our spreadsheet, which makes up the rest of the metrics.
These spreadsheets are available in our VIP training. We don't have them available to download on our main website, but we have covered lots of different areas in our Hotspot Series and that's all accessible from our VIP training. You can see, here, we're currently filming this video in October 2018 and we've got some other videos here that cover different locations. So, if you want access to other areas, you can do that in VIP. If you want to just look at Stoke as a location, we'll cover all of the data here in today's video, for you. And we'll show you, not only which postcodes are performing, but why, and what we tend to look for in our key metrics.
If you've looked at any of our Hotspot Series before you have a good idea as to what this tends to follow, it's the same format. But if it's brand new, to you, this video, I'll just give you a very basic outline as to the things to consider.
First of all, there are four key metrics that we look at - historical performance, historic market growth, historic sale increases and current demand. We have our own internal metrics that we use to pass these. I'll go through these in a bit more detail in a second, but if you wanted to shortcut some of that learning curve, five postcodes, the ones that perform really well for our leading indicators is these highlighted columns here so ST2, ST3, ST4 and ST5.
ST1... It doesn't mean it's not, or it doesn't mean it's a bad postcode, in general. It just means it doesn't pass, first of all, the four growth metrics that we outline and we have, ideally, a minimum of three out of four that we want to achieve. So, if we've got a column here like ST2, highlighted orange, then it's achieved three out of those four metrics. If it's highlighted blue, then it achieves four out of those four metrics. Obviously, a great indication.
So, if you wanted to shortcut this video and you just want to see the postcodes that we would typically suggest, it' these postcodes, here. And then, there is a section below this video to look at a live property deal, if you want to do that as well. If you want to stick around and look at the data, we'll go straight into that now.
Mouseprice Heat Maps
The first thing we're looking at is the heat map. Is the area, in general, Stoke-on-Trent, positive for the heat map? And then, also, secondary, is the postcodes showing positive indications for that as well?
What we mean by this is, is this heat map section, here. We've covered heat maps before on other videos on the website, but what we want to look at is two-fold. Mouseprice is great, as a heat map, to look at a wider snapshot and it gives clearer imagery, I think, when you are first looking at a location. Then Zoopla is good when you want to dial in a bit closer on to a given area and see, maybe, property listings and stuff as well. But Mouseprice is good, here, to see, first of all, how Stoke looks, as a general area.
So, this section, southern part, west of Stoke looks to be a high-value location. Dark blue is your lower-value areas. Dark red is your high-value areas. So, we want to focus, personally, on areas that are a lighter blue, going into greens and then, close by to these, oranges, reds and yellows.
For us, that gives a good indication of the possible spillover of prices into these other areas from these higher-value locations. It also gives an idea as to potential, tenant profile, home ownership, just general valuations. It's a very simplistic way of looking at what a current snapshot in time is for local values and then you can work that back and cross-reference with other datasets from there.
Very low-value locations, from our own experience, our own portfolios, haven't performed quite as well, in terms of growth, tenant profile, actually achieved yields. On paper, they might be higher-yields, but when you consider void periods, maintenance, arrears, things like that, we tend to favour just going up a level in terms of location, where possible.
Zoopla Heat Maps
Once we know Stoke, as an area, potentially, shows some potential based on its heat map, then we're going to be looking at each, individual postcode. For this, we use Zoopla. To do this, just go to the 'For Sale' section. ST1 is the postcode we're going to be looking at first. 'Property Type', 'Values', you can leave all these blank if you want. We tend to put a minimum value of 15 million in there. That's not because we're buying properties for 15 million. It's just because we want to clear all of these pins that would usually show up when you first do a search for property. We just want to look at the heat map, rather than the actual specific properties at this stage. So, it just makes it a bit cleaner for us to look at.
As you can see on the heat map, here: In ST1, you've got a few dark blue areas, not many surrounding locations that are high-value locations, so on our postcode map or on our Excel spreadsheet, should I say, we've put this as a No for being heat map positive. Whereas, the other postcodes ST2 to ST5 we show as passing that criteria.
I'm not going to go through every single postcode and every single dataset. I'll just show you the basic premise of what we've covered, how we've covered it and what that data tends to show. So, you can then use that in your own areas. You can use that, certainly, to cross-reference Stoke, if you wanted to and see if that's a location for you.
That one is a heat map for ST2, scroll in a bit closer. ST2 has some dark blue sections, here, like ST1, but they're less and you have some lighter blue areas that cover that area, as well. Then you also have some very nearby values, lighter yellows, some good oranges and some reds. For us, if we could look at property opportunities closer towards this region here, that's a little bit better from a potential growth perspective with a spillover of values. That's why we've initially said Yes for that, passing those criteria.
Then ST3, show you what that shows and looks like, as well. There's no guarantee here. There's no specific thing that we're looking for, other than the potential for house price spillover on some of these higher-value areas. So, it's a little bit gut instinct as to what you would favour and why you would select better areas, passing or failing. Certainly, you can use our dataset, if you want to. You can create your own and use your own, I suppose, threshold, as to what you are comfortable with. But for us, ST1 wouldn't pass. ST2, ST3, ST4, ST5, as you can see here, would be better indicators for these house prices.
House Price Changes
Once that's passed, next up, we're going to be looking at more nuanced data with value changes over a 12-month, 5-year and 10-year timeframe and then also the average price paid over a 12-month, 5-year and 10-year timeframe.
This data we get, squarely, from Zoopla. If you go to 'House Prices', type in your postcode, so ST1, in this instance, it will come up with market activity at the top. This is always going to be variable because it's showing a live snapshot in time. We're doing this in October 2018, so, if you were to check this another week or month, ahead, this data is going to be slightly different, but you can see the market activity.
You can check and change the data range here and you can see what sorts of volumes and data we are looking at. We are, potentially, focusing here on value changes and the average price paid and then also, it gives you a percentage here on the value change as well. Effectively, what this is showing is ST1, as a postcode, in the last 12 months, had a value change of -1.98% or as a value, the price range is £2,026. That's where we have this data, as you can see here.
There are lots of things to consider here. Local locations, sorry, local values and also, national market sentiment, are always going to change depending on the time of year. So, December might be different to July. It is also going to change depending on what is happening at that point in time. If mortgages and access to finance are easy, if, generally, people are very buoyant about the property market. Your datasets here, are always going to change. You do have to consider apples-for-apples, if you're comparing Stoke to Newcastle to Birmingham, for example. It's good to do that at the same time of year and then you can see what data each location is showing.
Stoke-on-Trent, here, as a general area, we've got data at the top and then we've got each postcode, location. The first thing that we are going to be focusing on, as our main criteria, is this column here, the last five years, to see what sort of percentage or value change has happened. Certainly, the last 12 months is important to consider. It just gives you an idea as to whether that market is going up, down, or staying static. But what we really want to see is, over the last five-year timeframe, a bigger snapshot, what sort of house price growth we've had, locally, within that area.
For us, the first, performance metric, is just passing on the heat map. The second performance metric is an 18%-or-above increase in value in the last five years. There is no industry standard for this. This is just a guide that we've used as a company, internally, for us to show whether a particular postcode is performing or not. For us, all of these postcodes, not only Stoke in general but all of these postcodes have achieved significantly higher than that 18% mark, which is a good indication.
ST1 isn't highlighted here because it fails, for us, on the heat map, in general. We're looking for a minimum of three growth metrics achieved. Ideally, four would be perfect, but a minimum of three. But if it fails the heat map, that, for us, is a hard stop No, so we wouldn't look to progress. We would add the data, but we won't look to progress that location, further on down.
That's why it's not highlighted, even though you can see here it's got higher than 18% value change. As I said, there's no national criteria or a baseline for this. This is just us, internally, Property Investments UK, what company baselines we use, when we're looking at new locations.
Average Price Paid
Next up, we're going to be looking at the average price paid. Again, this data comes from Zoopla. You can change the timeframe, five years. You can change the area, location. We're looking at its average price paid over a 5-year timeframe, compared to a 12-month timeframe.
We use a formula here to give us those results, but you can get that, fundamentally, from this dataset, here, which is comparing this last 5 years to the last 12 months, and seeing what the price difference has been as a percentage over that timeframe.
For us, our criteria are about 5% and above. Anything below that would just fall below our minimum criteria. ST2, as you can see, is quite close to 5%, but is just slightly below it. ST1, although it fails on the heat map, performs very well in terms of average price growth in the last 5 years, or 12 months to 5 years and Stoke-on-Trent, in general, has performed over that 5% baseline that we've set. Three, four and five also passed, so, as in ST3, ST4 and ST5, also passed those baseline criteria.
Then, finally, we're looking at average selling time. So, not only how the market has performed, historically, in terms of value changes and actual, physical, average price paid and also what the current value of property is like, in the area, to give us a good indication as to what sort of yields we might get. These are all the data calculations you can do for that.
How Buyant is the Property Market in Stoke-on-Trent?
But, finally, you want to look at how quick, how buoyant a location is going to be. That's where home.co.uk really helps out. You're looking for time-to-sell analysis so you can search that from the main website. Put in your postcode. We look at ST1. It comes up. There are loads of different datasets that Home says. We're looking at time-to-sell, overall, just in the postcode area, in the last 90 days.
We're not looking at the price bands, but you can do that. You can look at price bands, the number of bedrooms, property types. You can really break it down as to what level data you want. For us, we just want to see how that postcode is performing, as a general area.
This is also going to give you mixed data, depending on how big that postcode area is. If it is a small area you're looking at, there might not be many sales, in that location, over the last 90 days, so, your dataset could be skewed. So, it's important to consider that, if you are looking at smaller towns or very rural areas. You're not going to have enough data to give you a clear indication of how quick or active a market might be because you might have a property in there that's an outlier, that sells very fast or sells very slow.
But this is a good dataset to look at. ST1 is a good area in terms of size, a decent number of properties. There's no minimum or maximum that we look at, but just something to bear in mind.
We're looking at the median selling time, here, so, 30 days. Mainly, we look at the median, rather than mean, because median just strips out those outliers, the properties that do take longer to sell or do sell really quick. We want to just look at averages, 30-days average in ST1 and then we input that into our column, here.
For us, we're looking at sale time of fewer than 60 days. There is a good, positive indicator of nice sale speed in that location. So, all of these postcodes pass for that. Quite quick sales happening, currently, in Stoke-on-Trent, quite a buoyant market. That would also be indicative here. You can see the house price average paid, going up quite well over the last 10 years, the value change, and also the last 5 years, the value change, in those areas. In fact, some quite significant growth. So, certainly, over this snapshot of data, each of these postcodes are performing quite well from where they were maybe five years ago.
Putting it all Together
So, the postcodes that passed all four metrics, so ST3, ST4, and ST5, which is great, means they've got a good heat map and positive indicators for spillover of their prices, potentially. Good value changes in the last 5 years, a good average price paid in the last 12 months to 5 years and then a quick selling time as well, so that's showing quite well.
ST1, as we said, unfortunately, falls down on the heat map and ST2, although it's got a relatively dark blue section or some dark blue sections of the heat map, that's a bit touch-and-go, actually, whether that passed the heat map. So, you can use your own guidance on that whether you would pass that or not. We did. It squeaked through, from our criteria and then it went on to perform quite well with value changes. Just under, on average price paid in the last 12 months to 5 years, but then quite quick, current selling time in days. For us, that passes three out of the four metrics, as a postcode area.
So, that's it, really. Gives you, hopefully, a good idea as to the datasets that we use, the websites that we use and the types of postcodes that we see performing, currently, quite well.
A Buy-To-Let Investment in Stoke
We do have a property that's available, it's a live opportunity, at the moment, in the ST area, or Stoke-on-Trent area. If you look below this video, there'll be either a button or a link or an opt-in form where you can get more information about that property deal. We don't have these property deals directly. We don't source them directly, ourselves, or provide them as deals, directly, ourselves. We tend to work with a couple of master agents for buy-to-lets or platforms for property crowdfunding.
We can introduce you to these companies and the developments that we find that we feel fit our own internal criteria and pass our own location metrics. So, if you are looking for a property deal, currently, look below this video and you'll be able to get more information about some live opportunities if you like the areas, if you like the look of these postcodes and you are ready to add to your buy-to-let portfolio.
I hope that helps. If you've got any questions, as always, don't hesitate to ask. All the best. Take care. Bye.