Where does London end?


29 May 2013, Words by Yolande Barnes


The extent of London’s influence has been measured in a new way by Savills Research – with surprising results.  It seems that London extends to the South East coastline and as far as Suffolk, Bristol and Dorset and has a population of 25.5million inhabitants.


We have known for a long time that London’s economy is very different from the rest of the UK and that London is behaving like a global city-state, more akin in some respects to Hong Kong and Singapore than the rest of the UK or even the rest of Europe.


Consequently, there is a huge appetite from overseas investors for London real estate. London is a premier World City and the fastest growing city in Europe which makes it an irresistible location for all sorts of inward investment but much of this interest stops at the inner London boroughs.


Is there a case for investors to look further afield?  Where does London’s City State begin and end? Where can investors participate in its growth and prosperity without competing in the crowded markets of inner London? Or, looking at it another way, where can residents and workers participate without having to compete with overseas investors?


While London looms large on the world stage, it is not physically one of the largest cities – though numbers vary as this can be measured in a variety of ways.  Its official urban area population, at 9.6 million, is dwarfed by Tokyo at 37.2m, Shanghai 21.8m and even New York at 20.7m. Investors tend to concentrate on a much more limited geographical area when investing in the capital, some venturing no further than the central postcodes, others limited by London’s green belt or the M25.


When it comes to investment decisions about residential property though, this may be a mistake. Most Londoners have known that London’s influence extends well beyond its political boundaries for a long time. New evidence from Savills Research team shows that wealth moves out of London into the markets of the South East, South West and Eastern England, carried every day on commuter trains and by those relocating out of the capital but taking some of its wealth with them.


This means that property markets outside of London behave in a similar way to London and are driven by many of the same factors.  We measured these markets at a county and borough level and then correlated with the performance of London as a whole. Some areas to the South and South West of London, including Windsor, Guildford, Dorking and Redhill/Reigate have shared over 97.5% of their house price movements in previous property market cycles with the capital; effectively behaving like an extension of London boroughs.


Large areas to the North, South and West of London, incorporating St Albans, Oxford, Reading and Winchester have shared over 95% of their house price movements with Greater London. The M4 corridor, stretching all the way to Bristol, shows a high, 90% to 95% correlation with average house price movements in London.  More than 80% correlations are seen as far afield as North Suffolk, Somerset and Herefordshire as well as Essex and Kent.


What the map shows is that London’s city state extends over most of southern England, south of a line from the Severn to the Wash. Only the most peripheral and rural counties of Devon, Cornwall and Norfolk are excluded.  This area has a population of 25.5 million people, rivalling the urban areas of Tokyo and Shanghai. Investors are able to obtain exposure to London’s economy and property markets in these locations and are less likely to experience price distortions and market movements caused solely by the appetite of other investors looking for the same exposure and crowding into central boroughs.





Key Contacts

Yolande Barnes

Yolande Barnes

World Research

Savills Margaret Street

+44 (0) 20 7409 8899


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