Is a two or three bedroom house better in Chichester?

I met a new landlord last week who was looking to buy a house in Chichester to rent out, but wondered whether he should buy a two or three bedroom property.

Chichester’s two bedroom houses currently on the market range in price from £230,000 - £550,000. Meanwhile three bedroom houses can be bought from £250,000, whilst the most expensive three bedroom house in Chichester is on the market for £1.1m!

The average two bedroom house currently for sale in Chichester is priced at £295,000, whilst the average rent for a two bed house in Chichester is £925pcm. This suggests an average yield of 3.8% for two bedroom houses in Chichester.

This compares to an average yield of just 3.6% for three bedroom houses in Chichester, which is derived from an average asking price currently of £385,000 and an average rent of £1,150pcm.

This suggests that two bedroom houses are the way to go when buying to let in Chichester. However, if we look at the capital growth (increase in value) over the past ten years, we see that two bedroom houses in Chichester have increased just 4% in this timeframe, whilst three bedroom houses have outperformed this, increasing by 16%.

In the past couple of years however I have witnessed two bedroom houses leaping in price, whilst the price of three bedroom houses have remained relatively static. The data shows this to be true, with two bedroom houses up 25% in price in the past two years, compared to an increase of ‘just’ 10% for three bedroom houses.

Some of this appears to have been brought about by the lack of availability of two bedroom houses, with just 43 currently on the market for sale in Chichester, of which 28 have sold (65%). Compare this to Chichester’s three bedroom houses and there is something of a glut in comparison, with 136 available. Of these, just 65 have sold (48%), demonstrating that two bedroom houses are in stronger demand.

This however means you’re less likely to get a good ‘deal’ on a two bedroom house, whereas an oversupply of three bedroom houses is leading to several great looking buys (evident in the fact the difference between the cheapest two bedroom house and the cheapest three bedroom house is just £20,000 - less than 10% more money for 50% more bedrooms!).

I expect this trend to continue; if you look at new-build sites there are very few two bedroom houses being built as, for not much more land usage, a three bedroom house can be built; resulting in a higher selling price and more profit for the developer.

As you can see, there are many different variables and considerations to bear in mind when thinking of investing in buy-to-let. If you’d like to discuss the options available to you, please get in touch.

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If you are looking for an agent that is well-established, professional and communicative in Chichester, then contact us to find out how we can get the best out of your investment property.

E-mail me on clive@crjlettings.co.uk or call 01243 624 599.

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