Renters are once again prioritizing ease of commuting when looking for a new home, according to new data from Savills.
The agent says this is reflected in the latest data showing that popular commuter areas have the strongest rental growth.
Areas with the best growth in the first three months of this year include Chester, Birmingham, Cobham and Weybridge, where values rose 3.9 percent, 3 percent and 2 percent respectively.
Areas with the biggest rental increases include Weybridge, where values have risen by 2 per cent in the past three months
It’s a stark contrast to the start of the pandemic four years ago, when lockdowns led to a ‘race for space’ in the property market as people flocked to rural and coastal areas.
As people return to the office, Savills says tenants are prioritizing the ease of their commute when choosing a new place to live.
The appeal of commuter locations such as Cobham and Weybridge is the opportunity to enjoy the surrounding countryside, combined with the amenities of a vibrant city and good transport links.
The train station in Weybridge offers train services to central London in under half an hour.
Areas with the biggest rent increases include the city of Chester, where values have risen by 3.9 per cent in the past three months
Savills said urban areas continue to outperform their surrounding areas overall, with regional towns and cities growing by 8.2 per cent this year, compared to 2.3 per cent growth in surrounding areas.
Built-up areas in the London commuter belt are also performing better at 3.9 percent, compared to 1.5 percent for more rural commuter belt locations.
Harriet Scanlan, from estate agency Antony Roberts in Richmond, said: ‘Despite a slight increase in the number of properties available to rent in areas popular with commuters, such as our part of London, this has not translated into cheaper rents.
‘Tenants will have a wider range of choices, leading to an increase in the number of viewings per property, but landlords will continue to benefit from stable rental income and minimal to no vacancy periods.
‘It is important to note, however, that while the modest increase in the number of available rental properties is encouraging, it is not yet enough to tip the balance in favor of tenants. Supply lags behind demand, so rental prices remain robust.’
| Q1 2024 | Suburban | Inner commuter | Outer commuter | Regional towns and cities | Cotswolds and South West | All regional offices |
|---|---|---|---|---|---|---|
| Quarterly growth | 0.90% | 0.70% | 0.80% | 0.90% | 0.50% | 0.90% |
| Quarterly growth, fourth quarter 2023 | -0.30% | 0.30% | 0.60% | -0.60% | -0.80% | -0.20% |
| Annual growth | 4.20% | 2.20% | 3.60% | 7.40% | 3.30% | 4.00% |
| Growth since March 20 | 21.10% | 24.30% | 24.70% | 26.90% | 26.20% | 23.90% |
| Source: Savills | ||||||
Expensive areas in the heart of London have not seen a comparable increase in rental prices.
They rose 0.3 per cent during the first three months of this year, with Savills attributing the slowdown in rental growth in the market to ‘slipping back into a seasonal pattern’.
It means that rents have risen by 0.9 percent in affluent regions over the past three months, while annual growth has slowed to 4 percent.
However, Savills explained that rents are still significantly higher than before the start of the pandemic at 18 percent.
| Q1 2024 | Excellent central London | North West London | South West London | West London | North and East London | All first class London |
|---|---|---|---|---|---|---|
| Quarterly growth Q1 2024 | 0.50% | 0.60% | -0.10% | 1.10% | 0.00% | 0.30% |
| Quarterly growth Q4 2023 | -0.50% | 0.50% | -0.40% | 0.70% | 0.00% | -0.10% |
| Annual growth | 2.50% | 4.10% | 2.90% | 6.30% | 2.70% | 3.20% |
| Growth since March 2020 | 14.00% | 18.90% | 20.70% | 21.30% | 15.90% | 17.70% |
| Source: Savills |
Rents in regional towns and cities continue to outperform those in surrounding areas, Savills says
Savills said Chester, Birmingham, Cobham and Weybridge are among the strongest performers this year as tenants once again prioritize the ease of commuting.
Jessica Tomlinson from Savills said: ‘Rental growth increased slightly this quarter, but affordability pressures and increased inventory have left rental growth at much lower levels than in the past three years.
‘But rents remain at record highs, and the prospect of falling mortgage rates is expected to ease some of the financial burden on landlords.
‘Rental growth continues to outpace capital value growth, meaning returns have improved across the sector, which will support continued investment.
‘In London, houses are now outperforming apartments, indicating that the apartment market may be reaching an affordability ceiling, while renters looking for homes tend to have a little more leeway when it comes to budget.
‘In addition, a stronger sales market has limited the number of homes available to rent in the capital, particularly in west and north-west London.’
