- Holiday lettings in Wales provide owners an average yield of 11.7%
- Nationwide, the average yield is 10.3%
- Holiday lettings in Dorset and the South Coast see the lowest yields at 5.9%
- Those who are investing in National Parks can expect to pay a 22% premium due to limited housing supply
- As house prices grow, returns in the East of England and North West are forecasted to increase to 16%
Research from holiday property fund, Second Estates, reveals that holiday lets in Wales provided owners the greatest yields at 11.7% over the past twelve months, followed by Northumberland where investors saw yields of 11.5%. This is considerably higher than the national average of 10.3%. In comparison, holiday lettings in Dorset and the South Coast are seeing the lowest gross yields, on average 5.9%.
|Area||Average gross yield (previous 12 months)|
|Scottish Highlands & Islands||11.2%|
|Norfolk & Suffolk||7.9%|
|Dorset & South Coast||5.9%|
Areas with lower than average, but stable, property prices are seeing the highest yields. The current average property price in Wales is £152,999, significantly lower than the UK average of £224,144. Northumberland is also seeing a similar trend with property prices, but yields continue to stay high as holiday lets in the area are experiencing the longest seasons, receiving 280 days of bookings a year on average.
In comparison, properties in Dorset and the South Coast are also seeing an average of 280 days of booking a year. However the higher property prices in the region, current average is £249,839, mean investors are seeing a considerably lower yield from their investment.
Across the country, National Parks continue to be popular holiday destinations. However, the limited housing supply available means prospective investors are faced with higher house prices and lower yields. House prices within National Parks command a 22% premium, whilst properties within 5km of a National Park are 5% more. As reflected in national house price averages, properties in southern National Parks cost more; the New Forest is the most expensive National Park to purchase property with an average price of £525,000.
Investors who are looking to invest long-term can expect to see average returns increasing between 2018 and 2022. Across the UK, the forecasted return between those four years currently stands at 14%. However, investors looking at properties in the North West and East of England can expect to see projected returns of 16%.
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Alistair Malins, CEO of Second Estates, says: “As the UK tourism industry continues to boom investors can expect to see higher yields and returns in holiday lets compared to other property investments. However it can be a challenging asset class to invest in and can require a lot of time from investors. Second Estates is the first to operate in this market making it easier for sophisticated investors, family offices and institutions to benefit from these returns without the associated hassle. We use booking and valuation data to intelligently predict the highest yielding properties in high value regions to pinpoint properties that will deliver an excellent return for investors.”