Savills World Research
UK Residential
Market in Minutes
Prime Rental Markets
in the Commuter Belt
Q1 2015
SUMMARY
Needs based tenants dominate demand in commuter belt locations
■ Over the past year, rental growth
has been relatively subdued in
London’s commuter belt with
average rents rising 1.6%.
Table 1
Prime Rental Movements to Q1 2015
Prime
Suburban
Prime Inner
Commute
Prime Outer
Commute
All Prime
Commuter Belt
■ Since the peak of the market
in 2008, three and four bedroom
properties in affluent suburbs have
seen the strongest growth with
rents now 13.5% and 11.7% above
their previous peak respectively.
Q on Q
0.6%
0.8%
0.7%
0.7%
Y on Y
1.7%
1.1%
2.6%
1.6%
■ Across the prime commuter
belt markets as a whole we expect
rents to rise by 15.9% over the next
five years.
5 Year
19.0%
9.8%
N/A
14.1%
Source: Savills Research
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Market in Minutes | Prime Rental Markets in the Commuter Belt
In what has become an increasingly
seasonal market, prime housing in
London’s commuter belt saw rental
growth of 0.7% in the first quarter of
2015. However, this followed a modest
fall in rental values in the last quarter of
last year, essentially repeating a pattern
seen in each of the three past years.
Subdued growth
Generally, this means annual rental
growth across this market remains
subdued at 1.6%, with rents still on
average 1.5% below their peak of the
second quarter of 2008.
Over this period, by far the strongest
market has been the three and four
bedroom market in affluent suburbs
such as Esher, Weybridge and
Northwood, where rents are 13.5%
and 11.7% above their high point
some seven years ago.
By comparison much larger houses
have seen less than half the level of net
house price growth in the same period
with, in particular, a thinner seam of
demand from North American tenants
compared to previous years.
Further into the commuter belt, rents
for properties of five bedrooms or
more remain more than 6.0% below
their 2008 peak, with rents continuing
to fall marginally over the past year.
By contrast rental values of three
Q1 2015
bedroom prime properties have
recovered fully.
following the traditional relocation
routes out of London.
Divisions in the market
Once the uncertainty resulting from a
general election year subsides, this is
likely to create additional demand in
both the sales and lettings markets,
while also potentially reducing
levels of supply of rental stock from
accidental Landlords.
This reflects a wider division in the
market between needs based renters
looking for small or medium sized
housing in an urban environment
and 'big budget tenants' looking
for trophy properties, who remain
relatively scarce.
Accordingly the market is dominated
by affluent young couples unable
or not looking to buy and families
new to the area. This latter group
tends to comprise those relocating
for work reasons or moving for
lifestyle reasons and renting before
committing to a purchase.
Across the prime commuter belt
markets as a whole we expect rents to
rise by 15.9% over the course of the
next five years. n
Demand from the latter group has
tended to favour towns with good
schools, such as Harpenden,
Winchester and Cambridge, while
being more reluctant to rent in
surrounding villages. As such, the
emergence of prime urban markets
has been a common feature across
both the sales and rental market.
In numbers
Lessons from the 2013-14
English Housing Survey
■ 19.4% of all households are in the private rented
sector compared to 9.3% 20 years ago
■ 48.2% of households aged 25 – 34 are in the
private rented sector, up from 21.4% in 2003-04
■ 23.6% of all households aged 35-44 are in the
private rented sector up from 8.6% in 2003-14
Outlook
Looking forward, we expect the
preference for prime family housing in
the suburbs and key commuter towns
to continue, particularly as we see a
more meaningful increase in those
■ 36.0% of households with children are in the
private rented sector, up from 29.1% in 2003-14
Savills team
Residential ResearchLettings
Lucian Cook
UK Residential
020 7016 3837
[email protected]
Sophie Chick
UK Residential
020 7016 3786
[email protected]
Kirsty Lemond
UK Residential
020 7016 3836
[email protected]
Jane CronwrightBrown
Head of Lettings
020 7578 9980
jcronwrightbrown
@savills.com
Louise Griffiths
Head of Lettings,
South, Surrey &
South East
01932 838020
[email protected]
Tanya Blake
Head of Lettings,
Home Counties
01491 843 002
[email protected]
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