LOCATION & INVESTMENTPROPERTYGUIDE
SURREY
In the following sections, we’ll consider some of the factors that affect investment conditions across the county. They include: • Strategic position • The Regional Economy • Population and Demographics • Economic Data • Regeneration and Inward Investment • Key Towns o Woking o Guildford o Farnham o Epsom • The Surrey Housing Market o Property Market Data o Local Market Variations o Property Values o Yields • Local Property Market Profiles o Surrey Heath o Farnham o Guildford • Property Market Predictions
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not home to big cities and large centres of manufacturing. It is decidedly less developed than many of the regions we have previously covered, although it does boast its fair share of popular towns. It is nevertheless part of a very productive region, and it scores well on indices including education, average incomes and reported quality of life.
This property investment guide examines the county of Surrey and therefore covers an area close to the subjects of other previous guides – including Sussex and the central south coast of England. It looks at the character of this, England’s most wooded county, and the differing conditions across its various towns and
One key consideration for property investors is that many parts of Surrey are set well within London’s commuter belt. Their proximity to the capital give them an obvious appeal, but their diversity also means that different areas attract different groups of prospective buyers and tenants.
The town of Guildford, for example, is home to the University of Surrey and a body of approximately 16,000 students.
other hand, there are numerous villages and small towns set close to junctions on the M3 motorway that make particularly good bases for commuters; anyone who wants easy road access to London. Examples include communities such as Sunbury-on-Thames, Thorpe and Bagshot. Likewise, a section of the M25 passes through the eastern section of the county, so towns such as Merstham, Reigate and Leatherhead have a similar
A Summary
Nor does it have a distinct centre. Its population is spread across numerous locations – principally in towns such as Guildford and Woking, Farnham and Godalming, but also across a host of smaller communities. In short, the county is an amalgamation of disparate markets, some of which will be particularly attractive to investors, according to their specific interests, goals and priorities.
Why Invest in Property in Surrey?
It’s also the focus of ongoing regeneration works, investment and employment growth, so it promises strong rental demand with significant potential for Ongrowth.the
there are rural retreats that are ideally suited to the holiday cottage market, together with popular attractions and venues such as Chessington World of Adventures, Thorpe Park and Farnborough Airport. Consequently, Surrey has plenty to offer the tourist property investor, too.
It isn’t especially helpful to regard Surrey as a single property market. Despite its proximity to London, much of it is comparatively rural with a great deal of open green space, punctuated by isolated villages and smaller towns. Each of these conurbations has its own character – some appealing to busy commuters, others to tourists, students, business delegates or the recently retired.
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is one of the UK’s most affluent counties
• Average property values are well above the UK norm but have still grown strongly
• Its different communities offer different strengths to investors
Faced with such a diversity of locations, choosing a short-list for investment is very much a matter of personal preference and priority. However, some key points to consider
•include:Surrey
• Rental demand is very high in many areas
• Average incomes are well above the UK average
• It has an economy valued at around £43bn
• It is popular amongst commuters and higher-earning professionals
• It is part of the high-performing South East region
One important reason for Surrey’s appeal as an investment location is its proximity to London. Many of its towns lie close to the M3 motorway, and those set close to its various junctions make particularly convenient commuter-belt destinations. In the same vein, others lie close to the M25, or to other key arterial routes such as the A3, the A24 and the M23.
• The Surrey Hills AONB • The North Downs Way • Chantry Woods • Norbury Park Nature Reserve • Blackheath Common Nature Reserve • Thursley National Nature Reserve • National Trust - Denbies Hillside • National Trust - Abinger Roughs and Netley Park • National Trust - Hatchlands Park (park & garden) • National Trust - Leith Hill • National Trust - Witley and Milford Commons • Puttenham Common • Hanckley Common • The South Downs National Park
Economically, too, its location works in its favour. The capital lies just to its east, there are several busy ports and resorts a short way to the south, and the wider region is home to a host of internationally renowned universities and R&D centres of excellence. This all helps to keep the local economy buoyant – supporting higher than average earnings and levels of employment – and this, in turn, helps to support rising values in the property market.
Geography also helps to maintain short-stay demand on the part of tourists and outdoor enthusiasts. The county borders encompass some of the most scenic countryside in Britain, and many beautiful spaces are within very easy reach:
Strategic Position
Important growth sectors within its £43bn economy include:
The Regional Economy
The Enterprise M3 Local Enterprise Partnership (LEP) has a key role in stimulating local economic growth and works with other neighbouring LEPs to coordinate its efforts at a regional scale. It reports that there are 65,00 active businesses in Surrey, which it says, “is one of the most successful and productive areas for business in the UK.” Its recent successes include securing £37 million of new investment in jobs, learning and business, and supporting the growth of the region’s low carbon sector, which is now worth over £18
As we have reported in previous guides, the economy of the South East is extremely large and active. The region as a whole is reportedly the largest economic contributor outside London and it supports the majority of the country’s international trade infrastructure.
important force is Surrey County Council, which, responding to the Covid pandemic, published a strategy document: “Surrey’s Economic Future - Forward to 2030.” Focusing on supporting economic recovery in the short term and enhancing Surrey’s net contribution to the UK economy over the longer term, it identifies a series of ‘big priorities’ over the period to 2030. Objectives include:
• Advanced engineering
• Supporting the growth of Surrey’s innovation economy; building on existing strengths in R&D, and globally important centres of science and technology
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ONS employment figures show that 82.2% of Surrey’s working age residents were economically active in 2020 – a notably higher figure than the UK average of 78.5%. More striking still is the proportion of workers higher-paidinroles.
important consideration for investors because it is a key driver of demand, but similarly important are average incomes. That’s because they dictate people’s ability to pay rent, and the capacity of buyers to support rising capital values.
If its forecasts are anything like accurate, it means that more than 37,500 extra residents will be seeking accommodation in Surrey over the next 20 years. The lion’s share of that growth will likely occur in the larger population centres, but the general upswelling should also drive values higherPopulationcounty-wide.isan
the population as a whole is growing – the result both of a gradually ageing demographic and new job creation, which is tending to draw people into the county from the wider region and beyond. Surrey County Council estimates the current county population at around 1.2 million, but expects considerable further growth by 2043.
Population is not uniformly spread across the county, so housing demand varies accordingly. Surrey County Council notes that “we are a diverse county, with relatively high population density in the west and in the north along the border with Greater London, and a substantial rural area in theNevertheless,south.”
Other notable county-wide funding sources include:
• Highways infrastructure spending £115 million
• Sustainable transport schemes £50 million
Each of these schemes – together with the creation of numerous outlying commercial and industrial parks – should help to support further employment growth and help to support improving living conditions across the county.
In addition, many of Surrey’s constituent towns have their own regeneration strategies. For example, the Transform Leatherhead Masterplan has an estimated gross development value of £350 million, Woking is benefiting from a £700 million regeneration scheme, and Egham is witnessing the final stages of a £90 million town centre regeneration project. There are similar examples in urban centres across the county.
Given the absence of major cities, Surrey does not produce quite the same headline-grabbing statistics as many of Britain’s largest and best-known investment destinations. Nevertheless, it has an impressive £1 billion capital and infrastructure programme, which the County Council notes “will be focused on supporting greener growth” and delivering on the objectives listed earlier. One of its most important outcomes will be support for “Surrey residents to take up the 4,000 new jobs in the low-emission vehicles and infrastructure opportunities projected for 2030.”
Economic RegenerationDataand Inward Investment
ONS notes that 15.9% are “managers, directors and senior officials,” which compares against a UK average of 10.4%. A further 31.8% work in professional occupations, as opposed to the UK mean of 25.5%.
Population (Surrey) 1.18 million Population growth forecast (by 2043) +37,500
Average earnings +22% higher than UK average GVA per head (Surrey) £34,070 GVA per had (UK) £32,876
• Digital connectivity projects – 5G and 6G £170 million
At the opposite eastern edge of the county stands Epsom, home to around 31,000 residents and set well inside the area encompassed by the M25 motorway. Much closer to central London, it’s also situated on the South Western Railway, which offers direct services to London’s Waterloo station. As a result, it’s a very popular commuter-belt location and values here reflect its convenience for those with jobs in the capital.
Set close to Surrey’s geographical centre, Guildford is a busy town with a local population of around 77,000 and a wider borough population of nearly 150,000. Like Woking, it is likely to see significant population growth in the coming years, despite a severe shortage of available properties. Largely surrounded by the Surrey Hills AONB, it has little scope to expand outward so the bulk of housing provision is likely to be concentrated on brownfield sites in the urban centre. This should force a widening gulf between supply and demand; a disparity that will almost certainly exert upward pressure on both rental values and average prices.
Guildford
The market town of Farnham sits close to Surrey’s western border and yet, thanks to the A31, which passes through it, it still makes a useful base for London commuters. It’s a historic and picturesque town with a smaller population (around 38,000). With its castle and Georgian-era streets, it features prominently in Surrey’s own tourist marketing brochures and, unsurprisingly, it’s set in an area that draws healthy numbers of day-trippers and overnight visitors. In March 2022, the town hit the headlines by delivering the third-highest rate of capital growth anywhere in Britain; a full +22% year-on-year according to Rightmove at the time.
Woking
Woking is one of the larger towns in Surrey, set a little way back from the county’s northern boundary. By train, the journey to London takes only 25 minutes so it’s popular with commuters, and yet prices here are typically at least 15% lower than in the capital. It is currently benefiting from £700 million of inward investment and infrastructure spending, which has obvious consequences for job creation and business growth, and as the county population grows, planners expect a significant number to want to settle in the town.
Epsom
Key Towns
The largest population centres in Surrey tend to be found along a broad belt that runs eastward from Knaphill and Woking towards London. Then, towards the county’s eastern boundary, several of its towns’ suburbs blend together, all but merging with London’s outer reaches. Here, communities such as Epsom and Esher lie just inside the county boundary, only a stone’s throw from Greater London districts such as Surbiton and Chessington. However, local towns all have distinctive characters and different types of market appeal. It’s beyond the scope of this guide to give detailed information about each, but some examples are listed briefly below.
Farnham
In other UK markets, such elevated prices might be hard to sustain, but higher-than-average disposable incomes within the county have clearly helped to support capital growth. In Guildford, for example, over the course of 2021, Land Registry data show that residential properties gained an average of +£44,000 in value.
Here, as in so many other parts of Britain, much of that growth is the result of strong demand set against severe restrictions on supply. As the County Council explains, it is subject to “significant and inevitable constraints on development: much of the county is part of an Area of Outstanding Natural Beauty or is Metropolitan Green Belt.”
One of the most apparent features of Surrey’s property market is its high average values. According to Zoopla’s July 2022 house price index, the price of an average UK property stood at £256,900. By contrast, the company put the value of a typical Surrey home at £642,894.
Average rental growth (South East) +8.1% 2
1:Sources:Zoopla, September 2022
3: LiveYield, September 2022
Property Market Data
Average home price (Surrey) £642,894 1
Average rental value (South East) £1,224 2
Average gross yield (South East) 4.5% 3
The result is a long-standing imbalance that has driven capital values higher. Similar dynamics have done much the same for rental values.
Gains vary considerably by town and ward, but it’s clear that values have generally been rising. As a regional average, Zoopla estimates a rate of +8.2% for the South East (as of August 2022.) At a more local level, parts of the county have been delivering some of the UK’s very best rates of growth.
Average capital growth (South East) +8.2% 1
The Surrey Housing Market
2: Homelet Rental Index, August 2022
Average home price (UK) £256,900 1
Yields
Comparing the two sets of data, it seems evident that the usual price/yield correlation is at play in Surrey. That is to say that lower purchase costs tend to support better yields overall. Consequently, the more affordable districts such as Surrey Heath may work better for investors who prioritise gross yields, while higher priced markets such as Weybridge or Esher might suit those who simply want a relatively safe haven for large cash sums.
• Elmbridge (e.g. Weybridge) £855,362
• Woking 4.2% to 4.9%
Local Market Variations
Property Values
• Mole Valley 3.4% to 5.1%
• Elmbridge 2.6% to 4.9%
• Guildford £624,533
• Surrey Heath £405,000
• Guildford 3.4% to 4.8%
• Woking £541,264
• Waverley (e.g. Godalming) £680,318
• Mole Valley (e.g. Dorking) £582,532
Information published by LiveYield shows how rental returns vary by neighbourhood. (Ranges denote results across different postcodes within each district.)
• Waverley 4.1% to 4.9%
The preceding regional and county-level data provide a useful general overview but, as we noted earlier, Surrey is composed of numerous sub-markets, and their performance and appeal vary considerably. The following sections show the extent of this variation.
• Surrey Heath 3.6% to 5.5%
House price data from Zoopla in September 2022 show how average property values (all types) vary between locations. The following is a selection of districts across the county.
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Rail connections are also important here; another popular choice for those travelling regularly to the capital. There are stations at Bagshot and Camberley; both set on the South Western Railway line, which connects ultimately with London Waterloo. Their respective stations are an added attraction for tenants and investors alike.
Like other locations, Bagshot has struggled with a lack of new housing supply, being limited by green belt planning constraints, but what accommodation there is tends to attract intense demand. This is especially true of newer properties built to higher standards of energy efficiency.
Here, we will consider three locations in a little more detail:
• Bagshot £421,098
• Frimley £472,235
• Surrey Heath, one of Surrey’s strongest markets for yields;
Local Property Market Profiles
• Camberley £477,040
Prices in certain Surrey Heath communities are also well below the county average. This makes them obvious targets for younger professional workers who are working their way up the property ladder, and for investors who want their money to work harder and to deliver better yields than elsewhere in Surrey.
• Windlesham £763,848
For yields and affordability, Bagshot is clearly a stand-out choice. Prices here are low by local standards, and yet its transport links are excellent. It is set close to junction 3 of the M3, and it has its own railway station. It’s also set just 20km from Heathrow (to the north east), and 40km from
• Guildford, which is home to the University of Surrey and the county’s largest town by local authority population.
• Farnham, which has seen some of the fastest rates of capital growth; and
affords ready access to some of the region’s most attractive countryside and modern leisure amenities, and it’s one of several areas now benefiting from highway improvements and over £140 million of local authority investment in community improvements.
However, as the figures below reveal, prices vary considerably, even across this one district.
Surrey Heath
Surrey Heath is a local authority district to the north of the county, home to popular commuter destinations such as Bagshot, Lightwater and Frimley. Importantly, it bestrides the M3 motorway, which makes it an especially appealing area for those travelling regularly into London.
It’s a picturesque town, known for its Georgian streets, its 12th century castle and other historic buildings, but it’s also a very active community, with a busy calendar of markets and public events. This all helps to make it a popular haunt for visitors so, for property investors, it has potential as a profitable short-stay tourism destination.
Guildford
In Guildford, however, in addition to inward investment and regeneration spending, the town can also count on dependable demand on the part of university students and staff. The University itself reports that it supports over 16,000 students, comprising:
Undergraduate students: 12,579
Ongoing growth will inevitably put pressure on the local housing market, particularly given the existing constraints on new development land. That combination of rising demand and limited supply is a proven recipe for price growth in terms of both capital and rental values.
Postgraduate (taught) students: 2,710
Farnham is an attractive market town in the Borough of Waverley. It lies close to the western edge of the county, farthest from London, but it is well served by the A31, which runs between Southampton and the capital. The greater distance from London makes it rather less well suited for commuters than some other Surrey districts but it certainly has other important attractions.
Postgraduate (research) students: 1,153
For investors, Guildford represents a very different proposition. First, it has a much larger population; its local authority area embraces some 143,000 residents, according to ONS data for 2021. This represents an increase of some 6,400 people since 2011, and the trend is likely to continue. Local NHS services expect the number to rise to 149,122 by 2028.
Farnham
Quality of life is a key feature of this market, and it is well-populated by affluent residents and tourists alike. This might be one reason why it has fared so well in terms of capital appreciation in recent times – particularly since the Covid pandemic, which prompted many city-dwellers to seek homes with better access to open green space.
Some of this variation might be the result of ONS having to work with small data sets, so it’s probably best not to read too much into this, but here, as with any prospective investment, it’s clearly important to do careful research before committing to a purchase.
ONS data drills down to the ward level and it tells a rather more nuanced story. Over the course of 2021, some of Farnham’s local wards undoubtedly delivered exceptional returns. The Frensham, Dockenfield and Tilford ward, for example, delivered annual growth of +28%. However, other wards produced much less dramatic results. Farnham Castle saw gains of +8%, not far from the UK average, but values in the central Firgrove ward rose by only 5%, and in Farnham Moor Park, they fell by -7%.
In March 2022, Rightmove estimated that average values in Farnham had risen to £728,413 - up +22% year-on-year. Only two other UK destinations fared better over that period.
• Relatively affordable prices
• Strong and reliable demand for housing Significantly constrained supply Evidence of economic growth Rising local populations
At a more local level, it’s likely, that some of Surrey’s most popular commuter-belt communities will substantially outperform this regional forecast.
•
As with any large town, Guildford is an investment market that demands careful investigation at a very localised level.
Savills has published a revised 5-year residential price forecast that includes regional variations. Across the UK, it expects values to rise by +7.5% in 2022, and by a cumulative +17.4% by 2026. Given the relatively high cost of property in the South East, it forecasts a slightly slower growth rate in the region – just +13.5% over the same 5-year period – but, of course, this remains only a broad region-wide average.
•
Investors may well see the best returns from locations characterised by:
Guildford therefore has a manifold appeal: to local residents working locally; to locals who commute to London and other major employment centres; to students and academic staff; and, of course, to the investors who seek to target these important tenant markets.
Property Market Predictions
•
UK house price forecasts are now suggesting growth of around +5% by the year-end. This is higher than we saw in Q1 and Q2 forecasts due to the continued resilience of the market, but the expectation of a gradual slowing is widespread.
Taking average prices across all Guildford’s wards, ONS data show that mean values rose from £609,156 to £653,246 – an annual gain of +£44,090. This is equivalent to a growth-rate of approximately +7.2%. However, beneath that is considerable variation – i.e. between a low of £363,148 in the Ash Wharf ward, and a high of just over £1.1 million in Clandon and Horsley.
UK-wide capital growth forecasts for 2022 are significantly more restrained than they were in 2020 and 2021. Economists expect that a combination of rising living costs, a higher tax burden and other factors will tend to constrain real incomes in 2022 and beyond. This should limit ordinary people’s ability to take on larger mortgages or to pay rising rental costs, so the overall effect should be to dampen activity in the market.
• Good connections by rail and road
However, as previously noted, average values here tend to be considerably higher than average. Arguably, local properties have therefore offered less room for price growth, so they have produced only modest growth and, given their high initial purchase costs, only modest yields.
Parts of the county are very well suited to tourism – close to National Parks, beautiful walking country, amusement parks and more. For the student market, the obvious choice is Guildford. Many other locations are more oriented towards local workers and retired residents, while others still are particularly well placed to cater for commuters with jobs in London.
For investors, the choice comes down to strategic priorities. Average values here are high, so most districts will struggle to deliver the sort of yields that landlords could potentially achieve elsewhere, in some of Britain’s more affordable markets. However, where yield is a key concern, there are still pockets of comparative affordability that deliver very respectable results. Bagshot and the wider Surrey Heath area would be a good example.
Surrey is a county made up of numerous discrete communities – some rural and isolated; others more urban and already connected to London’s outer sprawl. Consequently, investors must regard it as a collection of disparate markets that appeal to very different market segments.
It’s often argued that higher values limit room for further price growth, and that seems to have been true at the broad regional level. The South East as a whole has been outperformed by regions such as Wales and the North West, and 5-year forecasts suggest that the same pattern will continue. However, at a more localised level, there are clearly wards and districts that are producing very strong gains.
A persistent gulf between supply and demand for housing will inevitably help to sustain average values. The fact that average earnings are relatively high in Surrey also bodes well for investors whose principal concern is capital growth. Increasing cost-of-living pressures will limit headroom for further price growth across the UK, but higher skills and higher incomes should help to make Surrey a more resilient investment market than most.
Summary