London’s Crossrail project will have a significant impact on the capital. For many, the morning commute to work will be made much easier, with faster journey times and better connections. Others will appreciate the reducing of congestion during their travels across the city.
The official Crossrail websites describes this as being “among the most significant infrastructure projects ever undertaken in the UK”1, and one of the largest construction projects in Europe. The new route will total over 100km in length, and include 40 stations (ten of which will be brand new).
An additional 1.5 million people will be able to travel to the centre of London within 45 minutes. But commuters are not the only ones who will be affected by Crossrail. Those who own property in London, specifically those close by to one of the 40 Crossrail stations, will likely notice a difference in their housing prices.
Property Prices to Increase as a Result of Crossrail
Although not scheduled to open to the public until 2018, property in London has already been impacted by Crossrail. Housing prices are going up, and are expected to continue to do so.
Research conducted by CBRE shows that housing prices have already increased by 31 percent2 in certain “hotspots”, since the project was given the go ahead. The property consultancy also expects further increases of around 3.3 percent per year, ahead of local house pricing growth, until the line officially opens.
Based on the average property prices in these areas (as of September 2016), this could mean an average increase of £133,000. Properties in the centre of London, where the new line will stretch from Paddington to Canary Wharf, are expected to see the biggest increase of around 4.8 percent a year until 20182.
Crossrail could add a total of £35 billion to the property sector by the time it launches, the research suggests.
Jennet Siebrits, head of residential research at CBRE, said: “Our research on Crossrail suggests that demand for property close to these stations has been so strong that we expect prices to continue to remain buoyant.”2
Why are property prices set to increase?
Based on the above research, we can expect average property prices in London to continue to increase, especially in areas with a Crossrail station.
But why does this happen? How are property prices affected by factors such as a new tube station?
The simple answer is that people want to live near a tube station for convenience. Demand goes up in these areas, and thus prices do too.
As mentioned, Crossrail will make the lives of commuters much easier. A journey from Bond Street to Heathrow Airport would normally take 49 minutes. With the new line, that will be cut down to 29 minutes2.
Commuters from outside the city will be able to get to the centre of London in just 15 minutes.
For similar reasons, Roundtree, an independent estate agent argues that property prices may even increase because of the decision to turn the tube into a 24 hour operation3.
There has not exactly been a wealth of new properties being built in these areas either, meaning the ones that are there, and the ones that are being constructed, become more valuable.
Who will be affected by these property price increases?
The closer a property is to one of the Crossrail stations, the more likely it is to be affected.
According to International Business Times5, some locations have seen a bigger impact than others. For example, Slough has seen an increase in housing prices of 60 percent (between 2010, when the government announced its commitment to the project, and 2016).
The national average in that time period is 20 percent.
Andrew Harvey, senior economic analyst at Nationwide, said: “The new Elizabeth Line [Crossrail] is likely to make Slough an attractive proposition for London workers who prefer not to live in the capital as journey times will be around 15 minutes faster into central London and 20 minutes faster to the Docklands.”
Who will benefit from property price increases?
Without a doubt, if property prices really are to continue increasing over the next couple of years, as a result of Crossrail, then property investors are sure to benefit.
But prices have been increasing for a while, and are doing so right now. So the earlier you get involved with an investment, the more you are likely to benefit (although, like with any other investment, there is no guarantee).
That’s what many investors have done already. JLL Residential says: “Crossrail has already triggered land purchases, development activity and price growth along its route but plenty of opportunities and gains still remain”6
If you have any questions about property investment, then don’t hesitate to contact our experts here at Cogress.