Housing market in southeast is worth £2tn

When the Premier League footballer arrived to view the property, with swimming pool, cinema room and grand marble atrium, he liked what he saw. But his response was unexpected: “I can’t afford it.”

Welcome to St George’s Hill, a gated residents’ association in Weybridge, Surrey, where the average property costs £5m and security guards patrol the rhododendron-lined avenues in 4-by-4 vehicles.

Housing map

The enclave of 430 houses, estimated to be worth about £2bn, is part of Elmbridge, a borough at the extreme end of the southeast property boom, whose homes are now worth more than the entire residential assets of Glasgow.

Soaring prices in places such as Elmbridge are underpinning a structural shift in the UK housing market, with London and its halo of commuter towns accounting for an ever larger slice of the country’s property wealth.

The housing market in London and the southeast is worth £2tn, or about 40 per cent of the UK by value. In contrast, property values in the north of England, Scotland, Wales and Northern Ireland have all fallen sharply in the last five years, causing property experts to warn that the country is becoming a two-tier housing market. The boom in and around London is being driven by overseas buyers, many of whom come to the capital in search of a safe place to store their wealth.

Simon Ashwell, director at the Weybridge office of estate agent Savills, said foreign buyers – and particularly Russians – had driven up average St George’s Hill prices by 5.6 per cent in the past year alone. “There has been a massive influx of international money into the area,” he said.

Once a haven for City gents, wealthy families and the odd Beatle, the enclave has now moved out of reach for all but the super-rich. Last year a house in St George’s Hill sold for a record £11.5m, and even empty plots can go for multiple millions.

But the Arts and Crafts manor houses that once nestled discreetly behind the deep hedgerows are no longer in favour, as evidenced by a swath of construction sites. The modern, international buyer prefers neo-classical mansions, replete with pilasters and Ionic columns. These new-build properties are fitted out with the latest networking technology, gyms, spas and the sought-after grandeur of a 4m high ceiling.

According to Savills, which is marketing the newly built Anoder House for £10.25m, last year broke records for the gated community, with 35 properties changing hands. At least two were bought by neighbouring owners, who razed their new acquisitions to the ground and used the acreage as extra garden.

Some decry the steady destruction of the old family homes, built from 1911 by WG Tarrant, a property developer who went bust after two world wars left Britain’s gentry reeling financially.

But in some ways St George’s Hill is returning to Tarrant’s original conception. “People can get misty-eyed about Tarrant but this is what he designed – massive mansions with servants’ quarters, all surrounded by their own large gardens,” said Mr Ashwell.

Elmbridge beyond the rarefied lanes of St George’s Hill contains a far wider range of properties, with everything from studio flats to four-bedroom semi-detached homes. But even here the power of the southeast economy has had an impact.

One long-term resident on the high street, who declined to be named, said several families had tried to move house but been unable to compete with demand. “People are staying put and extending,” she said. The town had not been entirely insulated from the effects of recession, she added, as seen in the number of charity shops springing up on the high street.

But for Jez Greenspan, manager of the VineKing wine merchants close to St George’s Hill, the location has been a huge boost to business. “We’ve seen growth of 7 or 8 per cent a year for the past two years – and that’s selling a luxury product in a potential triple-dip recession. It’s not bad going.”