Demand for New Homes on South Coast

There are signs of activity in the principal coastal towns. Big schemes central to meeting local demand Susan Emmett, from RICS, says: In Winchester, which has seen significant fluctuations in construction over the past decade, house building levels have fallen by 44% since 2007. Winchester continues to be the most buoyant new homes market, with both houses and flats selling to owner-occupiers and investors. We expect demand for new homes to continue. Winchester The Winchester market proved resilient during the downturn and remains strong as it benefits from price growth in the London market. Wealthy families relocating from the capital continue to settle in Winchester and the surrounding villages. The local new build market has seen greater interest from downsizers both from within and outside the area. Many are seeking to trade down from big country houses to more manageable properties. While some opt for lock-up-and-leave flats, houses with compact gardens remain most popular. As the availability of credit improves, about a quarter of new build apartment sales are going to buy-to-let investors and first-time buyers. Achieved prices for new-build homes have averaged £400 per sq ft. but may rise to £490 per sq ft. for something more exceptional. Coastal towns The growth in house prices and rise in market activity radiating out of London is failing to reach central parts of Bournemouth and Poole. Here, new development is dominated by more urban flatted schemes. In a part of the country where the number of people of retirement age is above the national average, purchasers are mostly local downsizers aged over 50 buying with cash or very small mortgages. A cold wet spring has not helped attract purchasers from outside the region. Buy-to-let investors and second home buyers are rare. Buyers seeking seaside boltholes for future retirement are scarce and more discerning. But the Government's Help to Buy scheme is serving to boost interest. Prices in Bournemouth and Poole average £332 and £314 per sq ft. respectively. In higher value neighbourhoods, such as Canford Cliffs, prices rise to £400 per sq ft. The luxury end of the market around Sandbanks continues to be driven by lifestyle buyers from outside the region seeking second homes. Although sales to discretionary purchasers at the top end of the market remain scarce, some buyers are still willing to pay over £1000 per sq ft. for the right property with harbour or sea views. Away from the waterfront, prices drop significantly. Although the Southampton property market was among the hardest hit by the recession, activity has picked up this year and building cranes have made a return to the skyline. The level of transactions are still less than half of peak levels and average prices are among the lowest in the region according to Land Registry data. West Dorset Urban regeneration is transforming central parts of Dorchester. Despite the slow economy, the £100 million Brewery Square scheme south of the town centre has seen strong off-plan take up. Achieved prices average £346 per sq ft. The contemporary look of the project contrasts with the traditional architecture at Poundbury, the urban extension to the west of Dorchester championed by The Prince of Wales. It is expected to be completed by 2025. As the number of new build completions in West Dorset dropped between 2007 and 2011, both schemes will play an important part in meeting housing requirements.

Southampton, Blackpool and Hull are top buy-to-let hotspots

Southampton, Blackpool and Hull have been named as the country's top "buy-to-let hotspots" for landlords looking to make good returns on their investments.

Due to its relatively affordable houses and average rents of £901 per month, Southampton topped the list compiled by HSBC of the best places for investors to put their cash.

Average property prices in Southampton are around £138,000, meaning that the average rental yield that an investor can expect to make is around 7.82%.

Blackpool came in second place, with its glittering Golden Mile, seaside views and popularity with tourists looking for holiday rentals and seasonal workers. Average rents in Blackpool stand at £494 a month, delivering a rental yield to investors of around 7.81%.

The rental yield on a property is the annual return that an investor can expect to make on it. It is worked out by calculating a year's rental income as a percentage of how much the rental property cost in the first place.

With their relatively cheap property prices, northern towns and cities dominated the top of the list. Hull, with its large student population, came in third position and Manchester was in fourth place.

There has recently been renewed interest in the buy-to-let sector, which has provided some decent returns at a time when savers are struggling to make any real money on their cash pots amid low interest rates.

Rents have soared in some regions over the last year amid strong demand in the rental sector and there have also been signs of lenders expanding their buy-to-let deals to meet the increased interest from investors.

Peter Dockar, head of mortgages at HSBC, said: "Buy-to-let remains a good investment for those looking for above-average returns. Twenty-three of the top 50 areas offer yields above 5%, significantly more than is available from more traditional savings options.

"However, it is clear there is a fine line between a property in a desirable area, the rents that can be achieved and the returns that can be yielded so it is key landlords do their research as often the most popular locations may not offer the best return."

HSBC looked at the 50 towns across England and Wales with the highest concentrations of private rental housing stock. Cardiff came just outside the top 10 best rental returns list at number 11, with average rental yields of 6.39%.

Despite the high rents charged in London, the capital did not score particularly highly in terms of the returns that investors can make because property prices are also high. Southwark produced the best returns out of the areas studied, at 6.15%.

The London boroughs of Hammersmith and Fulham and Kensington and Chelsea were found to generate the lowest yields out of the 50 areas looked at due to their expensive house prices. These London boroughs were found to generate average returns of 3.42% and 3.34% respectively.

While the typical monthly rent in Kensington and Chelsea was found to be £3,033, the average house price would set an aspiring landlord back by £1.09 million.