London’s commuter More than just house prices and travel times 2–3

Introduction

House prices are generally used as a proxy for an area’s desirability. Basic economics tells us that the higher the demand, the higher the price paid for it. The demand for a property in a commuter will reflect a number of attributes. These include travel time and cost to , quality of local schools, green space, local retail and other amenities.

An analysis of 67 commuter towns within 90 minutes of London shows that and Esher have the auspicious honour of the highest house prices outside London, with average prices in excess of £1 million. Gerrards Cross comes a close third. In contrast , Rainham and Rochester come in as the cheapest commuter towns. There is a marked East/West divide, with the cheaper locations to the East of London.

However, in this research we dig deeper to determine whether these prices reflect fair value. To do this we have formulated a desirability index, where we score a town/ on a number of factors. This can be used to estimate whether these prices are indeed justified. Our analysis shows that the most desirable towns are Beaconsfield, and . However, with the exception of Beaconsfield, these are not the most expensive towns and therefore are effectively undervalued. We have identified 25 towns that are over 10% undervalued using our relationship; broadly speaking our findings show that a 10% increase in our measure of desirability increases price by 10.5%.

Beaconsfield 4–5

Bishop’s Stortford

Luton

Welwyn Garden City East

Berkhamsted Hertford Hatfield North St Albans Hemel Hempstead

Amersham Beaconsfield Brentwood Benfleet Gerrards Cross Henley Rainham LONDON Grays Windsor Most expensive towns Average price

Egham Sunbury on Thames Rochester 1 Beaconsfield £1,067,934 Reading Staines 2 Esher £1,038,218 Walton on Thames 3 Gerrards Cross £989,162

Chertsey 4 Weybridge £912,170 Esher 5 £910,415 Weybridge 6 Oxshott £910,415 Oxshott Caterham 7 Henley £817,739 Farnborough 8 Rickmansworth £692,412 Leatherhead 9 Walton On Thames £682,889 Redhill 10 Amersham £682,656 Edenbridge Least expensive towns Average price 1 Luton £245,169 2 Rainham £267,292 3 Rochester £267,642

4 Grays £274,509

5 Gravesend £287,134

6 Rochford £302,022

7 Maidstone £319,025

Billingshurst 8 Harlow Town £319,738

Haywards Heath 9 Wickford £320,668 10 Crawley £325,541 6–7

Many housing decisions are Intuitively we think there is a relationship Analysing the trend relationship suggests Desirability versus price between the desirability of a place and that for every 10% increase in desirability, based on price, specifically house prices. Buyers are drawn to areas house prices increase by 10.5%. or in other can we afford to buy the that have the best retail, the best schools words a one point increase in desirability and leafy green open spaces. Commuters leads to a £20,315 increase in property price. £1,200,000 house we want in the area we want locations with good transport to and want. But it is interesting to from London. The top ranking towns, with 38 points each, were Beaconsfield and Amersham. With dissect the factors that And of course the most desirable places travel times of around 30 minutes, both areas £1,000,000 underpin demand and will have the strongest demand and therefore benefit from low density, open spaces and command the highest house prices. parkland, good schools and amenities. therefore in theory, the price. So based on this rationale, Beaconsfield, However, with a high quantum of large What rankings would our which tops the league for commuter house detached homes, Beaconsfield has an £800,000 prices, must have the most sought after and average house price of over £1million. In towns achieve if we focus on desirable housing market. However, ranking contrast, Amersham on the other hand has a the desirability of a town? a places’ desirability simply on price lower average house price of £683,000, and assumes a perfect relationship between is valued around 2% below what might be £600,000 And does its desirability the two. In this research we wanted to expected from our relationship index. correspond to the price paid? interrogate how strong the relationship

actually is and whether we can identify St Albans came in third with a score of 37, price house Average areas that are perhaps undervalued. yet was racked 13th by house price. The £400,000 analysis suggests prices are, at £653,000, To do this we have formulated a ‘desirability around 4% lower than expected. Similarly index’; this combines a number of factors Maidenhead with a desirability score of 36 we know important to buyers. and an average price of £614,378 is about £200,000 £40,000 lower than somewhere with a score The maximum score achievable was 55. of 36 ‘should’ be. The average score was 29 and the average house price for these towns was £515,000. 0 5 10 15 20 25 30 35 40

Desirability score

Desirability factors The elements that make a place attractive to live

Town Desirability Average House Price House Price Rank

1 Beaconsfield 38 £1,067,934 1

1 Amersham 38 £682,656 10

3 St Albans 37 £652,649 13

3 Guildford 37 £591,707 17

Travel time Annual travel cost Outstanding Outstanding Share of 5 Gerrards Cross 36 £989,162 3 primary school secondary school detached homes 5 Rickmansworth 36 £692,412 8

5 Maidenhead 36 £614,378 15

5 Farnham 36 £504,594 30

9 Leatherhead 35 £910,415 5

9 Oxted 35 £573,955 18

9 High Wycombe 35 £404,934 50

12 Godalming 34 £504,531 31 Retail Family Population Broadband Proximity to 12 Caterham 34 £499,353 33 provision friendly density speeds international airports 12 Bishop's Stortford 34 £461,529 38 8–9

Establishing that price is We are able to establish towns that have a While our relationship is quite robust, with a disproportionate relationship between house strong correlation between price and not the only factor in a prices and desirability; towns that given desirability, there are a handful of towns with house purchase, the their desirability should have a higher price. prices higher than might be expected. These Places like Hatfield, which is the most towns are clearly highly sought after, but we relationship between a high undervalued in our sample, with a score of do not pick up any specific factor in our desirability score and 34 but an average house price of £347,026 analysis. However, these towns are compared with the ‘average town’ (with a historically well established and popular to a a lower-than-average price of £515,000 and a score of 29). range of buyers, but in particular high purchase price might be the Similarly, Guildford has a price of £592,000 earning city workers. In addition, it is likely at and a score of 37. Our analysis suggests a least in part to reflect larger homes which ‘sweet spot’ for many home price nearer £677,000, meaning Guildford achieve higher prices. buyers and movers. is undervalued by 13%, and Oxted is also around 11% undervalued. Therefore, what is of most Top ten undervalued locations meaning, is which locations A total of 25 locations are undervalued by 1 Hatfield over 10% based on our desirability rank. 2 Maidstone might be exceptionally These include Caterham, which has a score ‘undervalued’, as this means of 34, but a price well below average, while 3 High Wycombe Farnham and Reading both have prices over 4 Grays there is potential for future 30% below expected. growth as price and 5 Gravesend desirability align. 6 Chelmsford 7 8 9 Bishop's Stortford 10 Rochester Most undervalued locations

Luton Bishop’s Stortford £245,169 | 18 £461,529 | 34

Welwyn Garden City £417,468 | 33 Chelmsford Hatfield £402,886 | 32 | Hemel Hempstead £347,026 34 £406,338 | 32 Borehamwood £504,157| 32 High Wycombe Benfleet £404,934 | 35 £337,410 | 23 Rainham | £267,292 19 Grays LONDON £274,509 | 24

Rochester Reading £267,642 | 21 £334,380 | 25 Gravesend £287,134 | 24 Frimley £422,370 | 29 Caterham £499,353 | 34 Maidstone Farnborough £319,025 | 31 Aldershot | £341,213 23 Oxted £331,128 | 23 Guildford | £573,955 35 Tonbridge Farnham £591,707 | 37 £504,594 | 36 £417,304 | 29 Godalming | | £504,531 34 Average House Price Desirability score Hatfield 10–11

Contacts Jennet Siebrits Leslie Schroeder Mark Collins Head of Residential Research Associate Director Chairman of Residential +44 20 7182 2066 +44 20 7182 3551 +44 20 7182 2264 [email protected] [email protected] [email protected]

Methodology –– 67 towns and outside of . Places chosen are all considered part of London’s ‘commuter belt area’ and had to be less than 90 minutes commute.

–– The overall desirability score is built up by combining a range of factors that are important consideration for buyers. We take the individual factors, such as travel time and cost, and assign each town a score based on its ranking and relative position versus other towns. The individual scores are combined together to give a total score with a possible total of 55.

• Current average house price • Rail travel time into London (main rail station) • Population density • Retail provision • Number of outstanding primary schools (w/in 3 miles of placename) • Number of outstanding secondary schools (w/in 3 miles of placename) • Family friendly index • Average broadband speeds • Share of detached dwellings • Proximity to an international airport

Sources ONS, Ofsted, Ofcom, Land Registry, The Family and Childcare Trust, National Rail, Experian Goad

Photography Cover: © Ivan Strba / istockphoto.com. P2-3: Greg Balfour Evans / Alamy Stock Photo. P9: Peter Moulton / Shutterstock.com. Opposite page: asiastock / Shutterstock.com.

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