How Far Will Your Real Estate Budget Go in this Cathedral City?

I wrote last week about the wonders of Chichester. On paper, this little cathedral city seems almost too good to be true…with history and culture, outdoor activities, shopping and conveniences…all wrapped up in a picturesque historic core.

Indeed, there is one big flaw in Chichester’s near-perfection: its property prices.

Development is constrained by the South Downs national park to the north and the protected Chichester Harbour area to the west. Almost 19,000 acres of land is inside private estates like Goodwood. That means supply constraints, in a city with high demand.

That demand isn’t just from locals. More than 3,300 homes in Chichester are second homes. Many owners are based in London or the commuter belt around it. They buy in Chichester because of its accessibility to London—90 minutes by train—and for the lifestyle. That’s the boat clubs, the national parks, the coastline, everything I mentioned in my last dispatch. Chichester in a nutshell is a great country retreat.

But it doesn’t come cheap.

The average price over the last year according to Rightmove was £408,127 ($565,786). Detached (standalone) homes sold for an average £599,598 ($831,222).

To give you an example, I’m renting a three-bed terraced (row) home. These homes were formerly small two-bed cottages. In recent years many have been remodeled, adding extra bedrooms and bathrooms. This one had an extra bedroom and bathroom carved out in the attic space. And, a downstairs extension added significant square feet to the open plan kitchen/dining room.

The house last sold in 2019 for £530,000 ($734,738).

The house next door is unrenovated, still a poky two-bedroom home. It sold in January 2021 for £415,000 ($575,314). The owner is currently adding an extension and remodeling the interior. I’d estimated the reno cost at around £100,000 ($138,629). Turns out, the owner is spending more than double that.

These homes are in a good location, only a five-minute walk to the city center, but in a quiet street. Away from the city center, you’ll pay a little less.

The entry level on the market right now is £100,000 ($138,629). That’s the list price on a tiny one-bed apartment. It’s a 10-minute walk to the center of town. It’s got little appeal, a cramped layout, and is only 280 square feet. It’s currently rented, generating £625 ($866) a month gross.

I ignored a raft of what looked like good value apartments—because they were on some form of shared ownership scheme (where you might only own 50% of the property) or a “lifetime lease.” The latter are usually in age-restricted communities, for those aged 60 plus. The downside is you (and your family) don’t benefit from any appreciation of the property.

The lowest priced two-bed apartment I found was listed at £194,950 ($270,259). It’s recently remodeled and a 15-minute walk to the town center.

On the house front, the lowest priced house was a two-bed mid-terrace at £250,000 ($346,574). It’s a 10-minute walk to the Cathedral and main shopping streets. With an open plan living space and a small rear terrace, it’s 761 square feet. And, totally lacking in any form of curb appeal.

At the other extreme, there’s a six-bed town home that dates back to the Elizabethan period. It mixes original features with modern conveniences. It’s in the historic heart of Chichester, with art galleries, restaurants, and shops on the doorstep. It’s listed at £1.25 million ($1.73 million).

But the burning question remains: is any of this good value?

Not in my opinion. You’re paying a premium for Chichester’s cachet and appeal. Travel to less fashionable areas close by, like Bognor Regis, and you’ll get more for your real estate buck…and be closer to the beach. You’re a short hop on a train or bus if you crave the shopping or entertainment on offer in Chichester.

Look farther afield and Chichester doesn’t stack up, either. For a budget of £100,000 ($138,629), you could buy that tiny studio in Chichester…or a new, furnished two-bed condo, in a luxury beachfront community in Panama. The £250,000 ($346,574) asking price on that two-bed terraced home in Chichester is more than the cost of a gorgeous penthouse on Spain’s Costa del Sol, with a terrace of 1000 square feet, perfect for alfresco dining. And that £1.25 million ($1.73 million) town home? Invest that lump sum wisely in emerging markets and you could build a multi-property portfolio, with excellent prospects for capital gains and a rental income stream.

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