Rickmansworth, in Hertfordshire, is high on the rich list, despite prices barely in the top 100
Britain’s 20 most affluent Postcodes
Postcode Ranking sector by affluence
1 N20 8 Totteridge 47
2 KT22 0 Oxshott 46
3 SL9 8 Gerrards Cross/Chalfont St Peter 118
4 KT24 5 East Horsley/Effingham 159
5 SL9 7 Gerrards Cross 124
6 WD3 4 Rickmansworth 92
7 SE21 7 Dulwich 70
8 KT10 9 Esher 72
9 CR3 7 Woldingham 129
10 RG9 3 Shiplake 134
11 AL5 2 Hatching Green/Harpenden 81
12 KT17 3 Epsom 236
13 SM2 7 Sutton 182
14 WD17 3 Cassiobury Drive, Watford 247
15 KT11 2 Cobham 94
16 BR2 6 Keston 132
17 W8 7 Campden Hill Road 3
18 SW3 4 King’s Road, Chelsea 7
19 RG9 6 Hambleden 150
20 GU10 2 Churt/Tilford 184
…and the 20 with the most expensive property
Postcode Ranking sector by price
1 SW7 1 Knightsbridge 24
2 SW3 6 Fulham Road, Chelsea 22
3 W8 7 Campden Hill Road 17
4 SW1X 7 Knightsbridge 26
5 W8 5 Kensington Court 29
6 W1K 1 Park Lane 42
7 SW3 4 King’s Road, Chelsea 18
8 SW1X 8 Kinnerton Street, Knightsbridge 55
9 SW1Y 5 St James’s 425
10 W1B 4 Regent Street 69
11 SW7 2 Princes Gate, South Kensington 77
12 W1J 5 Mayfair 88
13 W11 3 Notting Hill 36
14 W1K 7 Park Street, Mayfair 167
15 W1H 6 Portman Square 52
16 W8 4 Kensington Church Street 78
17 SW1W 9 Eaton Square 133
18 NW3 7 Hampstead 49
19 SW3 2 Walton Street, Chelsea 51
20 W1G 0 Cavendish Square 135
You drive through a neighbourhood of large, pricy houses with flashy cars on the drive.
The streets are clean, the paintwork pristine and a salad in the local deli is as expensive as a weekly shop.
But is this an area that is genuinely affluent, or one where residents are faking it?
Are the grand facades of their homes a solid investment, or do they hide some frighteningly large mortgages?
Last month, John Hills, professor of social policy at the London School of Economics, published a study entitled Wealth in the UK: Distribution, Accumulation and Policy, which revealed that 1 in 1 households now has net wealth of more than £967,200. In fact, he says, the wealthiest 10% of the population possesses 850 times as much as the bottom 10%.
Thanks to the long housing boom, many people have become millionaires without having to earn a penny.
However, in order to benefit you had to be a homeowner prior to 2005. Young people who have bought expensive houses since then are likely to have enormous mortgages. Wealth does not always lurk in the obvious places, however:
Data compiled exclusively for The Sunday Times by Experian, the information services company reveals that the priciest addresses do not necessarily harbor the wealthiest residents.
For property prices, there is nowhere in Britain to match SW7 1, the area around Rutland Gate, Knightsbridge. This postcode sector — which includes London’s most expensive development, One Hyde Park, where a penthouse reportedly sold for £136m, as well as a good number, of large townhouses — tops Experian’s index of house prices. Yet when it comes to genuine affluence, SW7 1 is a relatively lowly 24th on the index.
The most affluent residents are to be found in north London, with
Rickmansworth ranking at number 6 but barely scraping into the Top 100 of the most expensive properties in terms of property values.
“The area is home to numerous musicians, footballers and soap stars” says top Rickmansworth agency Sewell & Gardner. Experian’s affluence model includes house prices, but it also takes account of outstanding mortgage debt, income and other spending and saving patterns that are indicative of highnet- worth individuals.
Postcode sectors are then ranked according to the proportion of households that are in the top 5% of the population nationally. For example, Knightsbridge may top the property price index, but it scores slightly less for affluence, because its residents have large mortgages and it is not a primary address. Similarly, the area around the Fulham Road in Chelsea, in postcode sector SW3 6, is the second-highest ranking area according to house prices, but a relatively lowly 22nd Place in the affluence rankings. One reason is that more homeowners here have big mortgages.
Besides wealthy foreign buyers, the area is also popular with bankers, whose expertise in obtaining loans may allow them to leverage themselves more than most applicants. They may also have a higher appetite for risk.
“The streets off the Fulham Road are a very aspirational area,” says Ed Mead, a director of the west London estate agency Douglas & Gordon. “People who buy there are worried about their image and will strive to the nth degree to be able to boast about their address, so it doesn’t surprise me if they have large mortgages.” However, only small pockets of SW3 6 consist of streets of large banker-friendly houses.
Much of the sector is made up of two-bedroom flats, which tend to be bought by young people on their way up the property ladder. “Only about 20% of properties in the area are bought entirely for cash,” says Jonathan Hewlett, head of London region residential at Savills estate agency. Notably, all the 20 priciest sectors are in central London, while all but one of the most affluent are on the fringes of the capital. Oxshott and Effingham, in Surrey, and Gerrards Cross, in Buckinghamshire, are all monocultures of large suburban houses in substantial grounds. Age might be a factor: these properties tend to attract buyers who are a little later in life, but because of their distance from London they do not command the highest prices.
Central London postcodes are also pushed down the affluence rankings by the presence of social housing: even the wealthiest parts of Chelsea still have such properties on their doorsteps, while in suburban areas they are fewer and further between. “The most expensive areas read like the Monopoly board,” says Richard Jenkings, an analyst at Experian. “They are areas of expensive properties, but they are quite mixed, with everything from diplomats’ residences to council flats. Those that score highly in the affluence rankings tend to be ‘super suburbs’ — area of uniform large properties with large gardens and paddocks.”
The biggest discrepancy between affluence and house price are in WD17 3,
around Cassiobury Drive, Watford, which is the 14th most affluent area, but ranks only 247th in terms ofhouse price, and SW1Y 5, which covers St James’s, in central London. The latter is the ninth most expensive postcode sector, but only number 425 in the list of the most affluent. The data might be skewed a little by the low number of residential properties, but this is also an area favoured by hedge-fund managers, who are masters in creating an illusion of wealth.
Logically, buying a property in a genuinely affluent enclave ought to be a safer investment than one in a pricy area that is merely faking its affluence. The prime central London property market, however, is well known for defying logic. Collapsing banks and hedge funds may have caused a sharp turnover of property in 2008, but plenty of other highly leveraged buyers have bounded in to take their place.