Surrey Regional Meetings

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Matias Weiland

June 2017

The Surrey property market is a very interesting animal and has been particularly fascinating over the last 12 years when we consider what has happened to Surrey rents and house prices.

There’s currently much talk of what will happen to the rental property market following Brexit. To judge that, I believe we must look at what happened in the 2008/9 credit crunch (and what has happened since) to judge rationally and methodically, the possible ramifications for long-term investors in the Surrey property market.

You see, an important, yet overlooked measure, is the performance of rental income v. house prices (i.e. the resultant yields over time). In Surrey (as for the rest of Great Britain), notwithstanding a slight drop in 2008 and 2009, property rentals have been gradually increasing.

The income from rentals has been progressively increasing over the last 12 years. Today, they are 23.6 per cent higher than they were at the beginning of 2005. In fact, over the last five years, the average growth has been 2.3 per cent per annum. From a landlord’s point of view, an increase in average rental income is not to be sneered at. However, the observant readers will be noting that we are ignoring an important factor – our friend inflation.

This means when we compare rents in Surrey to inflation since 2005, Surrey landlords are worse off today, when they receive their monthly rental income, than they were in 2005, by 14.9 per cent in real terms (rents increased by 23.6 per cent since 2005, less the 38.5 per cent inflation since 2005 – net effect 14.9 per cent drop)

However, rental income is not the only way to generate money from property as property values can increase. Although in the short term, cash flows are diminishing, many Surrey landlords may be content to accept that in return for a colossal increase in capital value. Property values in Surrey have risen by 72.9 per cent since 2005.

This equates to a reasonably healthy 6.1 per cent per annum increase over the last 12 years. Even more interesting that this includes the 2008/9 property crash; this will make those Surrey landlords and investors feel a little better about the information regarding rents after inflation.

Matias Weiland MARLA
ARLA Propertymark Regional Representative
matiasweiland@arla-reps.co.uk

 South East

South East Conference | Kent

EVENT DETAILS
Date: 23 November 2017
Venue: Bridgewood Manor
Members: £99 +VAT
Non-members: £125 +VAT

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