Moving from a 2 bed Oxford Property to a 4 bed will cost you £1,067 pm

Moving to a bigger home is something Oxford people with growing young families aspire to. Last week I considered the general trend towards increased demand for 3 and 4 bedroom properties as ‘generation rent’ start planning families.  This week I look at the cost involved in buying a larger Oxford property.  Many people in two bedroom homes move to a three-bedroom home and some even make the jump to a four-bed home. Bigger homes, especially three-bed Oxford homes are much in demand and it can be a costly move.

If you live in Oxford in a two-bedroom property and wish to move to a four-bedroom house in Oxford, you would need to spend an additional £270,251 (or £1,067.49 pm in mortgage payments (based on the UK Bank average standard variable rate)). However, going straight to a four bed from a two-bed home is quite rare as most people jump from a two to three-bedroom home, then later in life, from a three to four-bedroom home.

So, after being asked my thoughts on moving home in Oxford by a friend recently, I did a little analysis of the local property market. To start with, let’s see what the average property price is for an Oxford home by the number of bedrooms it has.

 I then decided to calculate what it would cost to make the jump upmarket from one bedroom to two bedrooms, two to three bedrooms etc, etc, both in actual money and in mortgage payments (using the current standard variable rate of UK Banks of 4.74%).

There are some interesting jumps in costs when moving upmarket as an Oxford buyer. The cost of moving from one to two beds, and two to three beds is relatively reasonable, whilst the jump from three to four beds in Oxford is quite high and therefore financially prohibitive for most families. This helps provide a partial explanation as to why some four-bed properties are currently taking slightly longer to sell.  With Oxford already being one of the most expensive Cities for house affordability in the UK, it is not surprising that the properties at the top of the market prove unaffordable for many.

As an aside, there is a lesson here for all my blog readers. You can quite clearly see why the larger 4 and 5 bed properties don’t offer the best returns for buy to let landlords. Simply put the monthly finance costs and rents achieved don’t match up so well (i.e. a mortgage for a 4 bed home in Oxford would cost you 51.40% more when compared to a 3 bed mortgage, but the jump in rent would be a lot less than that). I don’t wish to be dismissive about the solidity of investing in larger properties because it does depend on your circumstances. Four bedroom properties sometimes offer other advantages, however, it is clear to see why the 3 bed family market is in such demand, and why I forecast that to continue over the coming 3 to 5 years.