What improvements are planned for London’s transport infrastructure and how might this impact property values in the capital?
Improvements to transport infrastructures would usually be expected to boost the prosperity of an area and the local property prices. There is considerable evidence to suggest that this is the case and that property values can increase as soon as projects are announced. However, an uplift in property prices isn’t guaranteed.
What are the implications of forthcoming transport infrastructure improvements in central London? Is now a good time to buy your new home or to sell your existing one? Could your property substantially increase in value over the coming years as a result of infrastructure improvements?
Improvements deliver variable results
The impact of transport projects is more varied than you might think. While some developments will spark impressive growth before so much as a brick has been laid, others cause barely a ripple in the market.
Research conducted by Nationwide suggested that properties within 500 metres of a tube station carry a premium in excess of 10% when compared to similar properties at a distance of 1km.
There are unlikely to be any further tube stations in central London, but other projects have been completed or are underway in outer London and further afield. These include the new Crossrail route, also known as the Elizabeth Line, which will run from Reading to Heathrow, through central London and on to Abbey Wood.
The Impact of Crossrail and HS2
Crossrail began to impact property prices along the route long before construction even began. The Jubilee line and DLR extensions also saw property prices rise in the areas adjacent to the new stations. There is no doubt that in regions where there are no direct rail links to the centre of the capital, a new station will have a dramatic effect on property values. Reduced travelling times are a major draw.
HS2, the planned high-speed rail link, would enable commuters to travel between Manchester and central London in a little over an hour.
While developments in outer London and beyond are good news for property owners in these regions, the story could be very different in the heart of the capital. With improved rail links, it is possible that more people may be prepared to live further way as their potential journey times have decreased. This might cause a fall in demand for properties closer to the centre of the city.
New housing developments reduce demand
New stations also tend to mean that land is released for commercial and housing developments, resulting in an increase in housing stock. Even in areas where a new station would otherwise cause an uplift in house prices, the number of new homes built might reduce demand to the point that house prices don’t rise at all.
It is also important to bear in mind that while new infrastructure may boost house prices over the longer term, those living adjacent to the construction sites will have to endure the noise pollution and disruption associated with the development until they are complete.
Improvements to roads
Of course, the transport infrastructure of London isn’t confined to the railways. The roads are severely congested and so it is tempting to think that improvements there would be a good thing. But better roads bring more traffic and more noise to an area, reducing the quality of life for residents and causing house prices to fall.
So, what does this all mean?
Is central London a special case?
There is no hard and fast formula for assessing the impact of infrastructure improvements on property prices. With so many variables and every development being impacted by a unique combination of factors, growth is never guaranteed. Property prices are likely to rise substantially in outer London and the Home Counties where rail and tube links improve access to central London. But the same may not be true in the centre of town.
What improvements are planned for London?
Certainly, the planned extension on the Gospel Oak to Barking line will influence house prices along the 4km extension between Barking and Barking Riverside. Transport for London are also planning an extension to the Bakerloo line
to run from Elephant and Castle via the Old Kent Road to Lewisham.
The impact on properties close to the new stations is likely to be significant. You can expect a similar situation in the areas affected by the proposed DLR extension to Thamesmead
and road tunnel between the Greenwich Peninsula and Silvertown. Not that there is any guarantee that these projects will ever come to fruition.
If you are buying or selling a property in central London and wish to maximise the potential of your investment, growth as a result of infrastructure improvements cannot be relied upon. But if you wait too long to see what happens, any opportunity that does exist could be lost.
For guidance on buying or selling property in central London, contact our team today