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12: Dorset – is it a good place to invest in property?


08-30-2004

The objective of this special report is to shed light on Dorset as an investment area for property, and objectively describe the plusses and minuses for this UK county.

 

Dorset is a coastal county between Hampshire and Devon on the south coast of England. There is very little industry or manufacturing in the county – farming is important though tourism, retail and public services are the most important sectors. There are a good deal of second homes, many owned by wealthy people from London and SE England. Holiday letting is also important to the local economy.

 

Weymouth is a fairly important port as is Poole to the east of the county. Bournemouth on the eastern border of Dorset is a large seaside town with banking, commercial services, large conference centre and holiday resort trading. The town is particularly popular in the summer months with holiday makers, weekenders and has a high transient and diverse European population during this period.

 

Below outlines the plusses and minuses of Dorset vis-ΰ-vis property investment:

 

Plusses:

 

Minuses:

 

Investment Options

 

As the property prices start to stagnate in southern England, you might be able to find some bargains in Dorset. As winter draws in, the holiday and second home buyers are likely to dry up – and bidding at auctions without the strong competition experienced in the last few years may start to become an option. The rainiest, darkest month of December is normally the quietest and best for getting a bargain – the pre-Christmas lull period.

 

Any property that can be bought cheaply, then quickly renovated or upgraded (e.g. new decoration, kitchen and bathroom) then let as all year round holiday lets could be particularly lucrative. A strategy of quickly adding value, then letting the property and re-mortgaging (to release your capital whilst getting income) would seem good as long as you are sure the property is a good all year round holiday let. For this type of let, I would look for:

 

 

Before looking to make any purchase, I advise to discuss with a local holiday letting agents to see what type of property in which location is likely to get all year round letting. Any property with good sea views will be popular. Balconies, terraces and gardens looking over the sea will also be popular – though you will have to spend more money purchasing such a property. That said, likely future capital value increases for properties with sea views will be stronger and if you can live in the short term with the slightly lower yields, then it could be a good longer term investment strategy.

 

Specific Investment Areas:

 

There are a few new developments to consider, which I have outlined below:

 

 

The plot below of average house prices since 1994 (Upmystreet.com) shows that Weymouth has only been following the national average house price increases to date, whilst Swanage up the coast (near the more expensive Poole area) has outperformed. I would expect a ripple effect down the coast as people start to appreciate how much Weymouth has to offer (e.g. beaches, coast, centre for countryside and walks, town, amenities, marine, port). 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary

I believe Dorset is one of the top quartile areas for property investing in the UK – particularly if you can find a cheap cottage close to the sea which can quickly be renovated and let out as a all year round holiday home. The flood of baby-boomers retiring to Dorset in the next 5-10 years should support further price increases in the medium to long term.

 

PropertyInvesting.net Aug 30th 2004

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