Olympic effect - the evidence

Following on from my recent post about the Olympic effect on East London property prices; up pops a report on the effect of the winning of the Olympic bid on specific areas of East London.

Research conducted by Lloyds TSB measuring house prices in 14 postal districts located nearest the Olympic Park show that many of the areas have out performed other areas in London.

Homerton and Shoreditch, both in the borough of Hackney, have seen average property prices rise by 69% and 53% respectively, significantly above the Greater London average of 36%.

Biggest risers

There has, however, been a mixed performance in property prices with Stratford, the home of the Olympic Stadium, seeing only a 3% increase in average prices, slower than any of the other postal districts.

‘Some areas close to the Olympic Park have experienced a sharp rise in property prices since London’s successful bid to host the 2012 Olympic and Paralympic Games. Part of this rise is likely to have been due to an increased interest in property in these locations from both buyers and investors as a result of the associated regeneration taking place,’ said Suren Thiru, housing economist at Lloyds TSB.

‘Looking forward, property prices across East London are likely to receive a boost from the legacy of improved infrastructure and transport links left by the London 2012 Olympics,’ added Thiru.

Mixed picture

Overall the research shows that average prices in the fourteen postal districts located close to the Olympic Park have risen by over a quarter, 26%, since July 2005. This exceeded the average rise of 20% across England, but was below the London average of 36%.

Four out of the 14 postal districts near Olympic Park saw house prices rise by more than the average for London and prices have bounced back strongly from the downturn in the housing market, rising by 13% between April 2009 and April 2010. This was almost three times the average rise across England of 5%, but slightly lower than the London average of 16%.

The average house price among the postal districts near Olympic Park is £262,953.
The least expensive postal district is Plaistow with an average house price of £196,426, followed by East Ham at £203,500 and Leyton at £209,769.

Based on prices from the Land Registry Homerton has seen the biggest rise at 69%, followed by Shoreditch at 53%, Dalston and Clapton both on 39%, Bethnal Green at 35% and Bow at 32%.

Leytonstone has seen prices rise 25%, Walthamstow is up 16%, Leyton up 13% and Forest Gate up 8%. East Ham has seen prices climb 7%, Plaistow 5%, Manor Park 4% and Stratford 3%.

East London will see a massive upgrade in facilities from hosting the Olympic and Paralympic Games. The area will benefit from a 500 acre Olympic Park reaching from the Hackney Marshes to the Thames, which will include an Olympic stadium, aquatic centre, along with several other sporting complexes and a 17,800 person Olympic village.

Significant transport improvements are also taking place. Investment is trebling the capacity of Stratford Regional Station, the main transport hub for London 2012 which is expected accommodate 120,000 passengers and enable 200 trains every hour during the Games. A range of other transport improvements serving the Park are already underway, including an extension to the Docklands Light Railway (DLR) and increasing capacity on the Jubilee Line.

What the research doesn't say

What the report however does not mention is that the best performing areas may be benefiting more from their proximity to the Square Mile than the regeneration impact of the Olympics. The accompanying photo shows taken on the fringes of Shoreditch along Shoreditch High Street shows just how close the area is to the gleaming towers of the City.

Direct regeneration impacts on house prices are very often difficult to quantify. The positive impact of infrastructure is frequently over estimated. I'm much more comfortable with the concept of the slow creep of 'gentrification'; where good areas spill out into less desirable areas over time; as purchasers go in search of value. This perhaps explains the relative out performance of areas such as Hoxton and Homerton. Remember the likes of Islington were practically no go areas in the 1970's!

Find out how to identify a 'property hotspot'

The one thing that is certain is that the 'Olympics effect' will focus property investors interest on the capital and that can only have a positive impact on property values throughout London.

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