Surrey property market benefiting from London ripple effect

Aided by an influx of overseas property investors, demand for prime London residences has generally outstripped supply since early 2009, helping to push property prices and rents significantly higher.

Estate agents across some of the capital's most desirable areas, from Kensington estate agents to Fulham estate agents, generally agree that international buyers have dominated the property sales in London, attracted by the cheap sterling and low interest rates.

Take Belgravia as an example. Whether looking for a property for sale in Belgravia or a property to rent in Belgravia, Belgravia estate agents report that housing supply is extremely restricted due to very high demand to live and invest in properties in the area, particularly from overseas nationals.

Stuart Bailey, head of Knight Frank in Belgravia, told the press recently that his firm have successfully sold no fewer than 15 homes in Belgravia for over £10 million apiece in the past 13 months.

But while foreign purchasers are vying for some of the best 'super-prime' homes in London, there are growing signs that residential property price growth is rippling out to wider London and the south east, including Sussex.

Wandsworth estate agents report that more people are looking at property for sale in Wandsworth as it presents a cheaper alternative to prime central London, not to mention an escape from the hustle and bustle of the heart of the capital.

Located in south London, Wandsworth is located less than five miles from Charing Cross making it easily commutable into central London. Consequently, more and more people are actively buying properties in Wandsworth, which in turn means that there are fewer homes on the market, pushing up property prices in the process.

Tim Harvey, managing director of expatriate mortgage specialist Offshoreonline.org said: "We have seen evidence of good quality houses selling in Wandsworth within two weeks of being listed."

Further afield, property markets in pockets of Surrey are also feeling the benefits from the property boom in London and the rise in foreigners buying homes in the UK.

A growing number of rich purchasers from Russia, Kazakhstan, the United Arab Emirates and the United States are buying properties in this part of the country.

Any homeowner with a property for sale in Esher, for example, can often expect to receive multiple viewings and possibly even a few offers within a short time of releasing their home onto the sales market, due to a scarcity of properties in the area.

John D Wood & Co. reports that there are multiple families for every available property in Esher.

The situation is similar as far as property for sale in Weybridge is concerned. This part of Surrey attracts a wide range of rich and famous buyers.

Property markets in other parts of Surrey are also prospering from greater demand among purchasers.

Homes located in key areas, such as Grayshott and Haslemere, south of the Hindhead tunnel in Surrey which opened in July 2011, have appreciated at a fast pace in anticipation of the project, and some local estate agents estimate that they could outperform the general market by increasing by as much as five per cent over the next year.

Despite wider concerns about the UK economy, prospects for property markets in parts of London and Surrey appear to be blooming if you know where to look.

Ray Withers of Property Frontiers said: "Over the past year we have seen a huge increase in demand for UK property, especially buy-to-let, so we are not surprised to see this level of interest continue into 2012 and whilst we remain in uncertain economic times, security and capital growth will prevail over riskier, often higher yielding opportunities."

Oxford property market to benefit from new transport links

New rail and road schemes are often important factors for people when looking for a new place to live, and can even bolster home prices in some regions of the country.

George Osborne announced 35 new transport initiatives in the Chancellor's Autumn Statement in November which could make a difference to the housing market and even boost local residential property prices in some parts of the country.

The Government desperately needs a positive strategy for growth and making infrastructure the centrepiece of the Autumn Statement is a good start," said a spokesperson for the Royal Institute of Chartered Surveyors. "Upgrading Britain's creaking infrastructure will deliver much needed work to members and the benefits will be felt throughout the economy."

The opening of the Hindhead tunnel in Surrey in July 2011, for example, has had enormous benefit for property prices in key areas south of the tunnel, such as Grayshott and Haslemere, which have seen property prices increase significantly, according to estate agents Knight Frank.

"New or improved transport infrastructure can make a significant difference to the market, especially if it becomes easier to commute into a nearby city," said Grainne Gilmore of Knight Frank. "Ease of travel is high on any list of priorities for new buyers."

Surrey has long been a popular part of England in which to live in. Cobham estate agents, for example, have been kept busy in recent months due to high demand for property for sale in Cobham as well as property to rent in Cobham.

Elsewhere in the country, Oxford estate agents John D Wood & Co. anticipate a major increase in demand for property for sale in Oxford thanks to the Autumn Statement.

The Government announced that it is backing 'East West Rail' between Oxford and Bedford as part of the National Infrastructure Plan. The new line, which aims to be open by 2017, will provide a fast link from Oxford to Bicester, Leighton Buzzard, Milton Keynes and Bedford, by-passing London and linking the West of England with the Midlands and the North.

As well as potentially boosting property sales in Oxford, the new scheme is expected to also drive greater demand for property to rent in Oxford.

A spokesperson for John D Wood & Co. said: "This announcement is excellent news for the villages in North Oxfordshire and Buckinghamshire, bringing a fast link from the academic and research centres of Oxford to the growing towns of Bicester and Milton Keynes.

"Chiltern Railways is also aiming to operate a new 100mph service between London Marylebone and Birmingham, stopping at Bicester and linking up with Oxford. This will provide a significant boost for commuters in Oxfordshire."

In London, Battersea estate agents are also delighted with the Chancellor's infrastructure spending, particularly the decision to extend the Northern tube line to Nine Elms and Battersea.

Peter Damesick, EMEA chief economist at property adviser CBRE, commented: "A specific benefit for London is the extension of the Northern line to Nine Elms and Battersea, using Tax Increment Financing."

Given the perilous state of public finances and the economic maelstrom at home and abroad, the Chancellor's Autumn Statement went about as far as the property industry could have reasonably hoped.

Housing shortage in South London

With residential construction levels at a historical low, there is a well-publicised requirement for more new homes in South London to help cope with a rising population and growing demand for homes to both rent and buy.

Talk to Wimbledon estate agents and they will report that there is nowhere near enough property for sale in Wimbledon to cope with existing demand. Consequently, house builders are falling over themselves to develop more homes in this desirable part of South London.

Construction firm Shanly Homes recently announced plans to launch a new homes scheme in Wimbledon in early 2012 on the site of a former convent.

The development, called St Anne's Mews, will become a private gated development of much-needed family homes, including eight desirable three, four and five bedroom town houses located on The Downs, a popular area of Wimbledon. The development also includes the conversion of a six-bedroom Victorian villa.

Sean Purtill, partner at Ellison's who are marketing the new St Anne's Mews development, said: "There is a strong demand for good quality family homes in Wimbledon and this is an exceptional development which benefits from a great location - three of the eight properties are already reserved, despite the fact that the site hasn't officially launched yet, so we expect there to be a flood of interest when it officially opens early next year."

The fact that properties at St Anne's Mews start from £1.7 million shows just how popular an area Wimbledon is to live in, which in turn is pricing many people out of the market, further illustrating the fact that more homes need to be built locally.

Whether looking at property for sale in Holland Park or property for sale in Kensington, the situation is similar across many other sought-after parts of London.

The shortage of home in desirable parts of the capital means that the high-end of the London property market is defying the wider housing market slowdown, with property prices increasing in some popular parts of the city.

"You have got the macro uncertainty but there's a huge demand for property in London from international buyers and from UK buyers," Berkeley's managing director Rob Perrins said in an interview with Reuters.

A high level of demand for property for sale in Fulham, for example, means that many Fulham estate agents are finding that a mini-boom is occurring locally, mainly due to the lack of homes on the market.

"We're now already beyond the 2007 peak, with prime properties 10 per cent above the top of the market," said Alex Oppenheim of John D Wood & Co. "It’s due to a lack of [housing] supply."

The prospect of capital growth is an attractive proposition for property investors and homeowners looking to one day move up or down the housing ladder. For a lot of people, property has become part of their investment strategy. With saving interest rates at a historic low and private sector pensions in a rather sorry state, many people are now relying on property to fund their retirement.

Caroline Kavanagh of Townends estate agent said: "As other investment options continue to give little in return, property will become an increasingly attractive proposition and a more viable long term investment for many."

The media is likely to paint a gloomy picture for the housing market in 2012. Initial signs are that the property market nationwide will remain somewhat subdued, with the exception of some primary parts of London, where property prices are expected to remain relatively stable or show modest growth.

Canny investors eye up properties in Oxford and Surrey

A shortage of space in some of the UK's most prominent areas and an abundance of cash-rich national and overseas purchasers will continue to drive rents and property prices higher across many parts of the country, including Oxford and Surrey, according to various estimates by property experts.

Surrey has long been a top location to live in. Property buyers often face tough competition for what comes to the market in Surrey, particularly when there is a new property for sale in Esher. High demand generally places upward pressure on property prices, which appeals to property investors looking to capitalise on future capital appreciation.

Esher, located in the borough of Elmbridge in south east England near the River Mole, is a popular place to live, thanks partly because it offers homebuyers the chance to have the practicality of city life with a countryside setting, due to its easy commutable distance to Charing Cross in central London.

As well as excellent transport links, homeowners in Esher also enjoy the local entertainment and shopping facilities. The area, a prosperous part of Surrey, was recently described as "one of the best places on Earth", by local resident and ex-footballer Gary Lineker.

High rental demand for homes in Esher is also appealing for property investors as this is helping to push rents higher.

Estate agents Hamptons International project that high rents in central London will continue to push demand further out to areas like Esher as renters are unable or unwilling to stretch their budgets.

"We are expecting the rental market boom to continue in prime and Greater London, driven by a continued imbalance between supply and demand. For the first time ever, the private rented sector will house more people in the UK than the social rented sector, which will put continued pressure on prices," said Lesley Cairns, head of lettings at Hamptons International.

High demand for property to rent in Oxford, particularly from students wanting to attend the local university, is also attracting more property investors to this vibrant and diverse county.

Rebecca Priestley of leading Oxford estate agents John D Wood & Co. comments: "Here [in Oxford] the excellent transport links to London and to the rest of the South of England, the good range of both private and state schooling, and excellent retail and recreational facilities makes the area highly attractive for those who will be moving their families and businesses here."

In fact, the lack of homes in relation to demand often means that any new property for sale in Oxford is generally treated like gold dust – sought after by a range of buyers, particularly investors looking to tap into the booming student rental market in Oxford.

Research by Paragon Mortgages illustrates the fact that the student housing sector presents landlords with some of the highest rental yields in this country.

Landlords renting properties to students generally achieve the highest rental returns, with an average yield of 7.62 per cent, according to Paragon.

High demand for properties in Oxford, including student housing, has inspired property developer A2Dominion to launch a new student housing scheme in Oxford.

The organisation plans to redevelop Luther Court to create 43 new homes and 19 cluster apartments for students.

A2Dominion, which currently manages over 2,500 homes in Oxford, is preparing a planning application for submission to Oxford City Council, following consultation with residents of Luther Court.

Laurinda Hornblow, A2Dominion's area director (North), said: "This is an exciting redevelopment project which will not only provide high quality new homes, replacing the existing Luther Court scheme which is almost 30 years old, but improve access and privacy for residents. Subject to planning consent, we hope to begin building work in late 2012."

The plans for the redevelopment, which have been designed by Yurky Cross Archtiects, include eight one-bedroom homes and 35 two-bedroom homes, and 19 student cluster flats, providing a total of 76 bedrooms for students.

Demand for rental properties remains high nationwide

Many would-be property purchasers are being forced to remain in rental accommodation for longer because they are struggling to raise the necessary deposit needed to access the best mortgage deals to buy a home.

According to research commissioned by furniture rental specialist Roomservice by CORT, over 80 per cent of tenants in the capital are being priced out of the housing market when their lease expires as the average time spent renting in London is now 57 months.

The study reveals that over half of London’s renters are actively saving to purchase a home, but eight out of ten will be unable to actually buy once their current tenancy agreement comes to an end.

Roger Hollis, managing director of Roomservice by CORT, said: "These results suggest that over a third of London’s renters are effectively excluded from buying their own home despite actively saving towards such a goal."

The booming rental market is encouraging more investors to enter the buy-to-let sector, and this, combined with foreign demand for the safe-haven of London, is adding to the supply-demand imbalance in the capital’s rental market.

Marc von Grundherr, the Lettings Director of Benham & Reeves estate agents, said: "Although autumn tends to quieten down a little after the busy summer months, we’re still seeing 10 or 11 applicants for every available property in some London locations."

Battersea estate agents, for example, who operate in the borough of Wandsworth, report that demand for property in the area is rising, with the supply of housing coming onto the rental market failing to keep up with existing demand.

Alex Oppenheim, manager of the Battersea branch of John D Wood & Co, says that there has been a hike in demand for properties in Battersea because the area offers greater value for money compared to other nearby desirable areas, such as Chelsea.

"During the past four years, there's been a huge rise in interest in the mansion blocks overlooking the park on Albert Bridge Road," Oppenheim said.

He added: "Battersea Square has seen great improvement. Lovely bistros have opened, and tired pubs have been revitalised-driven by the influx of young professionals."

More people, particularly parents, looking to live in this part of London are seeking property to rent in Wandsworth, mainly because of the excellent schools located in the area, with more than a third of Wandsworth's schools having been given an 'outstanding' rating by regulator Ofsted.

Demand for property to rent in Richmond, located close to Wandsworth, is also on the rise. This is unsurprising, given that Richmond is one of London’s most attractive boroughs.

Richmond, located 15 miles southwest of central London, provides a welcome break from the hustle and bustle of the capital, yet a fast train to London Waterloo will have people in central London in just 15 minutes.

It is not just in London that demand for rental accommodation is on the rise.

Whether looking at property to rent in Lymington, Hampshire, Luton in Bedfordshire or Bootle in Liverpool, research shows that rental demand is increasing across England and Wales, which is placing upward pressure on rental values.

The average rental price of a home in the in the private sector in England and Wales increased by 0.7% in September compared to the previous month, to hit a new high of £718 per month, according to recent data released by LSL Property Services, which owns various estate agents and letting agencies.

David Newnes of LSL said: "Rents continue to rise as the fundamentals continue to put upwards pressure on rents. Simply put, investment in the sector is not keeping pace with growing demand for accommodation requirements."

With demand for rental accommodation set to rise even further moving forward, the private-rented sector (PRS) will play an increasingly important role in providing homes in the UK.

David Salusbury, NLA Chairman, commented: "It [PRS] currently makes up 14 per cent of all households and we expect this to rise as people move away from homeownership towards more flexible forms of accommodation."

Housing shortage is pushing property prices higher

A fresh report from global real estate adviser DTZ shows that England is facing an annual shortfall of at least 70,000 new homes this year, despite government efforts to implement planning system reform in a bid to increase housing supply.

Chris Cobbold, head of DTZ's residential practice group, commented: "At present the government's strategy is like a two legged stool: relying on the traditional house building model and the new model of affordable housing delivery. This will not deliver the number of new homes the nation needs."

The problem is most acute in popular areas of the country, particularly in London, where demand for residential properties is greatest.

In south London, for example, there are nowhere near enough homes to satisfy existing demand, especially in some of the most desirable areas like Wandsworth, Richmond and Wimbledon.

London-based residential property developer London Square's first development at Wimbledon Village is one of only a small selection of housing developments in the area. The £30 million scheme will feature 10 houses, starting from £2 million, on the site of what was once a convent.

Adam Lawrence, chief executive of London Square, said: "There is a shortage of new homes, a shortage of skilled people who understand London and it is very capital intensive to build here."

With strong demand for property for sale in Wimbledon, Wimbledon estate agents have seen prices in many parts of the area increase in the past year, with the most expensive homes found on in Parkside, Wimbledon, where average prices stand at more than £5 million.

Estate agency chain Hamptons International is predicting that next year will experience a further price growth on the top end of the London property market of 4%.

Most Wandsworth estate agents would agree, largely due to a lack of new homes in relation to surging demand, while a weak sterling is attracting more international property investors.

"Overseas investors will be attracted to buying London property as a safe haven for investment, rather in the way that gold offers similar security," said a Hamptons statement.

Another factor driving demand for property for sale in Wandsworth, particularly among young families, is the area’s excellent schools. Over a third of Wandsworth's schools have now been given an ‘outstanding’ rating by regulator Ofsted.

Of the 80 nursery, primary, secondary and special schools and Pupil Referral Units in the borough, 30 now have the coveted status, ensuring that Wandsworth has one of the highest numbers of outstanding-rated schools in London.

Jeremy Best of John D Wood & Co. told the press that pressure for family houses in Wandsworth now is massive, particularly those located close to the area’s best schools.

"We usually have 15 to 20 applicants interested in each house, all willing to compromise on their ideal home as long as they can be sure their children will get into the primary they want," he said.

Further afield Richmond estate agents are also finding that there are not enough homes on the market, with an increasing volume of people actively looking to buy a property for sale in Richmond.

Until more new homes are delivered in south London, property prices will almost certainly rise, making it even harder to secure a home in this popular part of the capital.

Rental prices in Surrey are booming

Despite the gloomy economic outlook, the Bank of England's surprise move to pump £75 billion into the UK economy should work in favour of landlords, according to one senior mortgage expert.

David Whittaker, managing director of Mortgages for Business, said that the prospect of the cost of living becoming ever more expensive will force more people into the private rental sector.

Sir Mervyn King has insisted that the Bank of England's move is the right thing to do for the economy as the country faces "the most serious financial crisis" ever seen.

But Whittaker believes that King's view will generally benefit landlords looking to take advantage of a pending rise in rental values, as housing supply struggles to cater for ever growing demand for properties to rent.

He comments: "The number of people reliant on the private rental sector will spiral as a result [another round of quantitative easing] and professional landlords and property investors will continue to benefit from the ongoing economic environment. Rates remain low and property prices are stagnating at best and this has given landlords the perfect opportunity to capitalise on high rental demand."

Rents recorded their largest monthly increase in a year during August, the latest buy-to-let from LSL Property Services shows.

In August, the average rent in England and Wales increased by 1.2 per cent to £713 per month, which is £27 higher than in August 2010.

David Newnes, estate agency managing director of LSL Property Services, says: "We are in the thick of the busiest time of year for the rental market, and red-hot demand for properties is driving rents up at their fastest monthly pace in the last 12 months."

In the last two years, average rents have risen by more than £50 a month. With a big rise in the number of hopeful buyers able to get a mortgage unlikely in the foreseeable future, rents are likely to rise further.

Mr Newnes adds: "Competition for rental accommodation will not drop and further rent rises remain on the cards."

On a monthly basis, rental rises across Surrey were among the highest in the country, due to growing demand for homes to rent.

Whether tenants are looking for a property to rent in Weybridge, property to rent in Cobham or a property to rent in Esher, demand and indeed rents appear to be growing no matter where property analysts look across Surrey.

Sharp elbows and top bids are required to secure the best homes - and that's just to rent, according to leading estate agents John D Wood & Co.

The company report that demand for homes in areas like Cobham, Weybridge and Esher, among others, is rising due to a greater desire among families and professionals to live in Surrey, as it offers the best of both worlds.

Surrey is generally seen as a welcome escape from the hustle and bustle of the city, but is still within easy commutable distance to London.

A company spokesperson said that prospective tenants are "in the midst of a bidding war".

In Esher, John D Wood & Co. reports that there are three families for every available property. In Cobham there is a real shortage of smaller cottages at under £4,000 per month.

In Weybridge, for example, the supply-demand imbalance is being exacerbated by growing interest from international tenants, particularly from Russia and the United States, wanting to be near the International School.

Whatever happens to the wider UK economy, rental demand for properties in Surrey is unlikely to wane any time soon, and neither are rental values.