Properties in commuter towns surrounding London are an attractive alternative to those inside the capital.
The scale and influence of London as a metropolitan centre, relative to other cities, is unparalleled in most other countries. By population, London is more than seven times larger than the UK’s second city, Birmingham, and astonishingly has a higher population than the next 20 most populous cities combined! So unbalanced has the urban landscape become that the government has launched a major long-term policy initiative to create a “Northern Powerhouse” to combine the strengths of such cities as Manchester, Liverpool, Sheffield, Leeds, Bradford and Newcastle, to provide a counterweight to London’s overwhelming influence and power.
London is such a magnet for economic activity and employment that over three million people commute into London every working day of the year. Most of these workers live in London’s satellite commuter towns and small cities forming an urban necklace around the capital. We started to focus on the investment opportunities afforded by commuter towns well over a year ago.
As London prices were pushed ever higher (partly by foreign buyers and underpinned by chronic undersupply) and affordability constraints started to hamper property acquisition by domestic buyers, it seemed obvious to us that attention would start to shift to less expensive areas further from the centre as well as beyond the city limits.
In order to pinpoint the best opportunities for investment, we needed to identify locations for which there was a sustainable and growing demand. We began our search for towns and cities that combined the following key benefits:
• A convenient and quick journey
• A significant price differential with the capital
• Lifestyle benefits, in particular good schooling
Any decision to travel into London for work rather than living within the capital will focus on the amount of time (and to some extent, the cost) one must spend on the daily commute. Interestingly, there is no direct correlation between the swiftness of the journey and the price of properties.
In general, the most expensive commuter towns are located to the west of London in the well-heeled counties of Buckinghamshire, Berkshire and Surrey. From here, commuters need to travel to an interchange station such as Paddington or Waterloo and then switch to the underground system to complete their journey. All these add up to a longer commute.
Looking to the east of London, journeys to London’s financial hubs (the City and Canary Wharf ) are significantly quicker. It is worth noting here that Crossrail , featured in the July issue of Asian Property Review magazine, is already disrupting choices made by would-be commuters; and from 2018, West-East-West journeys across London will be significantly more convenient and rapid.
Other things being equal (which of course they rarely are), the extent of any price differential with the capital will enhance the relative attractiveness of competing commuter locations. Young professionals and families on a limited budget may be more attracted to towns that offer less expensive property. Generally, there is a significant West/East divide in the pricing of commuter town property. Western towns have a reputation for being prosperous and prestigious while Eastern towns are viewed (unfairly, in some cases) as less desirable.
These attitudes are reflected in the average price of a four-bedroom family home in Guildford in Surrey, for example, costing GBP762,000 and a similar property in Colchester, Essex costing GBP298,000.
It would be wrong to present commuter town living as second best. Many people make a positive choice to live outside the capital and travel daily to work. More space; less congestion, pollution and noise; and a sense of community and access to the countryside are all reasons for moving further afield. In truth, choosing a commuter town location is a blended decision of ‘push and pull’ factors.
Pushed by sky high property prices in London and pulled by an attractive environment in a commuter town, for example. There is one lifestyle factor that proves more important than any other in determining the relative attractiveness, and that is the quality of schools.
Professionals will move in anticipation of a good school for their children while families move in order to access the highest quality educational establishments. Not one of these factors is more important than the others; and it is only when you combine the three key demand drivers that you are able to identify London’s best commuter locations.
Top 3 commuter towns
The top three commuter locations based on the above are as follows:
1. Chelmsford (Essex) with an average family home price of GBP418,000, 86% of schools rated as “good” or above* and a journey time of 33 minutes.
2. High Wycombe (Buckinghamshire) with an average family house price of GBP431,000, 86% of schools rated as “good” or above and a journey time of just 28 minutes.
3. Epsom (Surrey) with an average family home price of GBP663,000, 85% of schools rated as “good” or above and a journey time of 36 minutes.
*Ofsted Rating – Office for Standards in Education
The journey from Chelmsford terminates at Liverpool Street, the station that serves the City of London providing additional convenience. Chelmsford is the UK’s newest city with its own vibrant economy and is undergoing rapid regeneration with the arrival of a host of prestigious shopping and other amenities. The city has first class schools, both public and private, and is surrounded by beautiful countryside. Best of all, it is still possible to secure a centrally located two-bedroom apartment for less than GBP275,000.
Paul Woodward is Managing Director of The Real Asset Boutique, a specialist in property investment and management in the UK, especially London. He can be contacted at: email@example.com