Why London Commuter Belt Properties Could Be a Good Property Investment Bet for 2022.
As we approach the final quarter of 2021, it is a good time to reflect on a challenging year and begin to look ahead at 2022. The market has changed in many ways over the last 18 months, leaving investors to wonder where the best UK hotspots for property investment in 2022 can be found. A leading candidate is the London Commuter Belt which is benefitting from a whole range of circumstances which make it one of the UK’s strongest buy to let property markets.
One of the most significant population trends in the UK is the so-called “London exodus”, where people have been swapping life in the capital for alternatives elsewhere. It has been underway for several years now, and the Coronavirus pandemic appears to have accelerated the trend, to the point where a report from PricewaterhouseCoopers has predicted that London’s population could decrease by as much as 300,000 in the coming years.
The latest reports from local experts in London show that almost 50,000 people left London in the first half of 2021. The reports go on to show that the vast majority of these people (92%) did not go far, ending up in London Commuter Belt towns. A major driver of this exodus is the rise of hybrid working. As that intensifies, we expect to see this trend continue, and the population of Commuter Belt towns increase concurrently.
However, it has become apparent that there simply are not enough homes in the Commuter Belt to satisfy all these new arrivals. 87% of Commuter Belt agents surveyed by Savills report that their available stock has decreased in recent months – an unprecedented number, especially given the existing undersupply issues in the Commuter Belt. This is going to have a major impact on the property and investment market.
Rents in the Commuter Belt have already hit their highest levels of annual growth since 2007, according to the latest quarterly residential analysis from Savills. Q2 2021 saw rental growth of 2.5% in the Commuter Belt, which resulted in huge annual rental growth of 7.2% in the year up to July 2021 – a figure which is unmatched elsewhere in the country.
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 and made living in places like the Commuter Belt more viable.
The second factor is the growing group described as “accidental renters”, a term which refers to those who are looking to buy but have not been able to due to the overall lack of stock in the most desirable areas, and many of them have landed in the Commuter Belt. Until stock levels increase, we can expect to see these “accidental renters” become more permanent figures on the Commuter Belt rental landscape.
Jessica Tomlinson, Research Analyst at Savills, said: “Across the commuter belt, we’ve also begun to see a change in priorities with people seeking to be closer to transport links and lifestyle amenities in town and city centres, in contrast to the flight to country properties in village and rural locations seen throughout last year”
This lack of supply is also set to push house prices up in the London Commuter Belt. When Savills upgraded its residential forecasts earlier this year, it initially looked like very good news for the Prime London market which is now predicted to see house price growth of 14.6% over the next five years.
However, it is even better news for the Commuter Belt where the forecasts are predicting growth as high as 21.6% over the same time period. It seems clear that it is not just high rental returns that investors can expect in the Commuter Belt – it is also strong capital appreciation.
“Buyer commitment to moving remains strong and longer-term adaptations to home working will benefit London’s wider commuter zone,” said Frances Clacy, Associate Director at Savills.
When looking to invest in UK property in 2022 it is vital to research current market trends and be aware that they are likely to have changed over the past year. The rise of the Commuter Belt as an alternative to London is one of these trends, and buying property in the London Commuter Belt is likely to be a very good investment in 2022.
To buy London Commuter Belt property and find out more about our available opportunities, get in touch with our team today for more information.