Buying near London Underground stations has been good for prices
House prices near London Underground stations, zone 2 and outward, have grown by nearly 11% annually over the last 20 years, above a 9% rise across the wider borough that the stations sit in.
The strongest price growth uplift of just over 3% was found around the Jubilee line and the DLR, areas which have undergone significant regeneration, according to a new analysis from CBRE.
The study also looked at average annual price growth in areas around National Rail and TfL rail stations in London, and found a similar overall uplift, at 1.7% per annum.
The firm says that the findings indicate that paying a premium for transport convenience is an investment that is likely to outperform the wider area over the long term.
Areas to watch include near new Underground stations and rail links, including Crossrail
Living close to public transport links is set to remain a strong preference in London, and in other cities including Birmingham, Manchester and Leeds, as more people abandon private cars in favour of alternatives like public transport and cycling, and also require good public transport links to support flexible working patterns
The research compared price growth over the last 20 years of homes within 500 metres of a tube station, equivalent to a short five to even minute walk in zone 2 and outwards, with average prices in the relevant local authority.
CBRE found that house prices near these tube stations have grown by 2.1% more per year than the local authority average while over the 20 year period from 1998, prices of homes around tube stations grew on average by 10.9% per annum, which was 2.1% above the local authority average of 8.8%.
The results were broadly consistent across all tube lines, but the strongest uplift of 3.1% above the wider borough were found on the Jubilee line and the DLR. These are lines which have stations in areas of widespread regeneration, like Stratford, Canary Wharf and Canning Town. Homes near District Line stations experienced the weakest growth uplift. However, prices near District line stations still outperformed the wider market by 1.2% above the borough average of 8.6%.
Segmenting the analysis to separate the periods before and after the global financial crisis indicates the uplift in the latter period, after 2009, was higher, at 2.7% per annum.
CBRE’s research also looked at average annual price growth in areas around National Rail and TfL rail stations in London, and found a similar overall uplift, at 1.7% per annum.
‘From its humble beginnings in 1863 the London Underground has grown into the most important mode of transport for London’s commuters. It now carries over five million passengers a day on 12 lines, with 300 stations and over 270 miles of track,’ said Jennet Siebrits, head of residential research UK at CBRE.
‘We know that people will pay a premium to live close to great transport links. The CBRE research shows that the investment pays off, and over time price growth of properties near tube stations outperforms other homes in the wider area by 2.1% per annum. For buyers, it’s good to know that paying a premium for transport convenience now is an investment that will appreciate greater value in the long term. Similarly, for investors looking for properties that will have good rental returns and attract tenants, they have the added assurance that properties are likely to outperform against the wider market,’ she explained.
‘The tube lines with some of the best house price growth are in areas where there has been infrastructure investment and wider regeneration, which also has a positive impact on price. For instance, the extension of the Jubilee Line to Canada Water, Canary Wharf and Stratford in zones 2/3 has coincided with widespread regeneration. Prices of homes near Jubilee line stations grew by 3.1% more than the local authority average, and they are among the most desirable places to live,’ she pointed out.
‘Developers have been able to unlock value in areas set to benefit from infrastructure investment, as part of wider regeneration and place making. Areas to watch include near the new Northern line stations and the proposed Bakerloo line extension, as well as the much anticipated Crossrail,’ she concluded.