London Commuter Belt
Featured Properties in the London Commuter Belt
Take a look at some of the best property investment opportunities within the London commuter belt.
When looking for reasons why to invest in the London commuter belt, the biggest clue is in the name. The commuter belt of the epicentre of the UK’s economy has long been a favourite for property investors both from the UK and across the globe to enhance their UK-based property portfolio.
As around 40% of the UK’s economy is generated in the South-East of England and wages tend to be much higher than elsewhere in the UK, it tends to be a massive draw for those looking to get ahead in their careers. This coupled with high property prices means that many are forced to rent, which is good news for property investors. With lower living costs in the commuter belt than in London, many choose to commute into the capital, a trend that has been there for generations and will not change anytime soon.
Outlined below are three main reasons why property investment in the London commuter belt should be a high priority for any property investor looking to optimise their property portfolio.
Why invest in the London Commuter Belt?
When looking for reasons why to invest in the London commuter belt, the biggest clue is in the name. The commuter belt of the epicentre of the UK’s economy has long been a favourite for property investors both from the UK and across the globe to enhance their UK-based property portfolio.
As around 40% of the UK’s economy is generated in the South-East of England and wages tend to be much higher than elsewhere in the UK, it tends to be a massive draw for those looking to get ahead in their careers. This coupled with high property prices means that many are forced to rent, which is good news for property investors. With lower living costs in the commuter belt than in London, many choose to commute into the capital, a trend that has been there for generations and will not change anytime soon.
Outlined below are three main reasons why property investment in the London commuter belt should be a high priority for any property investor looking to optimise their property portfolio.
EASY ACCESS TO TOP-TIER GLOBAL CITY
As more and more people leave London, rents in the Commuter Belt have hit their highest levels of annual growth since 2007, according to the latest quarterly residential analysis from Savills.
Over the last year, prices have risen by 12.5% on average across the London commuter belt, with a Savills predicting a further 21.6% growth over the next five years.
Rents have also followed a similar trend, with rents within the commuter belt rising over 8.5% in the last year.
This rental growth likely has two main causes. The first is the rise of hybrid working during the Coronavirus pandemic which forced many companies to rethink their working practices and allow more home working. This has lessened the demand for Central London property as commuters are no longer so strained and many more are beginning to see living outside the capital as a viable option. The second factor is the growing group described as “accidental renters”.
Referring to people who are looking to buy but have not been able to for a variety of reasons, mainly the overall lack of stock in the most desirable areas and unaffordability of London. These people are locked in the rental market, and many of them end up in the Commuter Belt to save on costs in order to raise the deposit required to become a homeowner. This is a trend that has been exacerbated by the cost-of-living crisis which shows no sign of abating.
Many are also buying in the commuter belt making it a very competitive market. Until stock levels increase, we can expect to see these “accidental renters” become more permanent figures on the rental landscape – a fact which will continue to push up rents in the London Commuter Belt.
This led to the rise of commuter belt property and a massive undersupply in the market with properties being snapped up very quickly by homebuyers, investors, and tenants alike.
Just a stone’s throw away from London, commuter towns are offering a more affordable way of life, and a higher standard of living yet still offering easy access to the global powerhouse that is London. Naturally, this has not just seen property values soar, but also rents – making this a potentially very profitable period for property investment.
The recent completion of the new Elizabeth Line, or Crossrail, has made transport to and across the capital quicker and more efficient for many. Bringing an additional 1.5 million people within a 45-minute commute of central London. For many, it is essentially leaving little reason to remain in London when it can, in many cases, be quicker – and certainly cheaper – to commute to work from outside the city.
With fantastic capital growth prospects and increasing rents, property investment within the London commuter belt is something any investor should be considering.
London commuter belt property price increase in the year up February 2022 (Savills)
Growth predicted within the London commuter belt over the next five years (Savills)
Rental increase in the commuter belt since March 2020 (Savills)
ECONOMIC Expansion
For obvious reasons, the economy of the London commuter belt is tied directly to the capital city – for this reason, investors can be extremely positive.
The latest forecast from the Greater London Assembly showed the capital’s economy grow by 7.5% in 2021 – beating forecasts by over 2% – with further growth of 6.9% predicted in 2022. Furthermore, the number of jobs available in the London workforce is set to increase by 2.9% in 2022 and 4.2% in 2023.
Following the Coronavirus pandemic, this is very positive news for investors. London’s economic growth, in fact, is easily outpacing both the rest of the UK and its closest European rivals, Paris and Frankfurt. Large-scale investments in public infrastructure, office space, retail space and other developments all point to this continuing for the long term.
Whilst we have seen mass migration from the city – 92% of whom remain within a commutable distance – since the pandemic, it is clear that the economic appeal, job opportunities and high wages available in London are major contributing factors when people are relocating.
This is good news for investors in the commuter belt, as greater London’s £500bn economy naturally benefits its surrounding areas. With over one-third of the entire UK’s economy being generated within the commuter belt and south-east, the wealth generated in and around the capital continues to push house prices and rents upwards due to the lack of supply, and people look for more affordable alternatives outside the city.
The demand for rental property outside of London significantly increased during the pandemic, with commuter belt rents rising by an average of 13.1% since the first lockdown.
A lack of stock has pushed rents upwards, which will continue to be the case until the imbalance between supply and demand is addressed. For Buy-to-Let investors, adding the right type of property to your portfolio in a desirable location will help underpin rental returns and negate void periods.
The percentage of those leaving London who move to the commuter belt (Hamptons International)
Estimated portion of the UK’s GVA that is generated in the south-east of England (ONS)
Expected annual rise in rents within the London commuter belt (Zoopla)
CHANGING POPULATION TRENDS
The high cost of living in London has seen the number of people living in the capital decrease by 550,000 over the last 10 years. Despite a decline in the number of people residing in the city, the variety of business opportunities and jobs available continue to attract workers.
As a result, towns and cities within commuting distance of London have experienced somewhat of a revival, bridging the gap between affordability for those working in the city. London is one of the world’s most-loved cities; however, as the cost of living in the capital continues to rise, there is a real need for investors and developers to combat the undersupply of affordable housing in the city.
With the average London house price hitting £689,230 in the year up to May 2022 it comes as no surprise that people are leaving the city for more affordable options.
This so-called ‘London exodus’ is driving the popularity of towns and cities located in commutable areas. For buy-to-let investors, owner-occupiers and tenants alike, the lower cost of property outside of London is a very popular choice. This strong tenant demand makes commuter belt hotspots ideal for investors looking for attractive yields with fantastic growth prospects.
This exodus is nothing new. Whilst it has always been very common for the city’s residents to move to the leafier suburbs, the Coronavirus pandemic appears to have accelerated the trend. PricewaterhouseCoopers has predicted that London’s population could decrease by as much as 300,000 in the coming years.
50,000 people left London in the first half of 2021, looking for more affordable homes elsewhere with the vast majority of these people (92%) ending up in London Commuter Belt towns. As none of these places compares in size to London, they do not have the housing stock to deal with this sudden influx of new homebuyers and renters, thus driving prices, and rents up.
The rise of companies allowing their staff to work from home more has only exacerbated this trend. As the city’s workers don’t have to be in the office as often as before, many are happy to take a slightly longer commute on these for a better way of life. Particularly given how well-connected London is to its commuter belt.
Historically, transport links have played a key part in property price performance, especially in London. Therefore, it comes as no surprise that the £15.7 billion Crossrail project has already shown some notable property price movement.
Connecting an additional 1.5 million people to within a 45-minute commute of canary wharf and the city, it has been a major contributing factor to many people’s decision to leave the capital.
In terms of key investor locations, it seems the South-East is already benefitting significantly. Over the last 12 months, the South-East has appeared to be the most popular region for London leavers. Rental values have increased by 8.1%, compared to the 5.9% UK average. With property price rises also outstripping the national average.
As these conditions appear set to continue, it would be prudent, and financially rewarding, for any property investor considering an investment in the London commuter belt, to start looking today.
Estimated number of people leaving London over the next 10 years (PWC)
The additional people who are now within a 45-minute commute of the City of London due to Crossrail (Crossrail)
The average cost (GBP) of a property in London in the year to May 2022 (Rightmove)
London commuter belt hotspots.
Are you wondering where the best place to invest within the London commuter belt is?
Well, there are many options available outside of the city. Here we’ve highlighted a few popular choices with excellent prospects that should be considered by any serious property investor looking to invest within London’s commuter belt.
If you can’t find what you’re looking for, please feel free to get in touch with us today to speak with one of our senior property consultants who will be happy to assist with your enquiry.
Download your FREE UK 2022 Buy-To-Let Property Guide.
After starting positively with the worst of COVID looking like it is behind us, 2022 has certainly managed to throw up a number of surprises for investors everywhere. However, it is not all doom and gloom.
In this guide, we drill down into how the market has fared for investors so far, and where it looks to be heading.
We are here to help you navigate the market with our consultative, informed and, above all, totally impartial approach.
For an informed overview of what is currently happening in the UK property market feel free to download our UK Buy-to-Let 2022 Guide here.
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By submitting your details via this online form you agree to be contacted via email/phone/SMS by Mobibi Invest in relation to its property investment brands. We do not share your personal details with third parties.
For further information, please see our Terms of Use.