Londoners could be forgiven for feeling ambivalent about the 2012 Olympics.
Last week it emerged that the budget for the Games has swelled from the
original estimate of £2.4 billion to £9.3 billion, of which £650 million
will be paid by payers of London council taxes. The debate about the
long-term impact of the Games on London and the country is likely to rumble
on, but at least one group of Londoners — those who own homes in the areas
near to the Olympic site — should gain from the Games.
In fact, a report by Halifax Estate Agency this month says that they are
already doing so. Its figures show that house price increases in East London
have outstripped other parts of the capital significantly. Since July 2005,
when London’s winning bid was announced, prices in the capital have
increased by 15 per cent. However, Leytonstone and Hackney have both
experienced property price rises of more than 20 per cent, and Clapton by 18
per cent.
But are East End property prices really sprinting ahead because of the
Olympics, or are there other factors at play? “It is very difficult to be
precise about the Olympic effect,” says Martin Ellis, chief economist at
Halifax. “To some extent you do have to rely on anecdotal evidence, and it
seems that the Olympics are creating a great deal of interest in the area,
from buyers and from investors. It is clear that those areas closest to the
Olympic site are outperforming the London average.”
It is also clear that areas such as Hackney and Clapton are cheap relative to
many parts of the capital. Mr Ellis concedes that “you cannot say that the
price increases are all down to the Olympic effect”. He says, however: “The
area is likely to become more attractive as regeneration projects continue
and transport links are improved. And our figures do fit in with what has
happened in other countries that have hosted the Olympics.”
Barcelona, for example, had a 131 per cent increase in house prices in the
five years before the 1992 Olympics, against an 83 per cent Spanish average.
Sydney house prices rose 50 per cent against an 11 per cent national average
from 1995 to 2000, while Atlanta and Athens also had significantly higher
house price rises in the years approaching their Olympics. It is clear,
however, from the Halifax figures that the Olympics effect has yet to be
felt in many East End locations. Leyton, Manor Park, Bow, East Ham, Bethnal
Green and even Stratford, have all seen below-average house price rises
since the Olympic bid was announced. “Over the longer term, we would still
expect those areas to outperform the London average,” Mr Ellis says.
But Neil Young, chief executive of the Young Group, the property portfolio
managers, says that in terms of investment Stratford is not particularly
appealing — although it will be the site of a new international rail
terminal in 2012. “The yield you achieve in areas like Stratford is quite
low,” Mr Young says. “A lot of the future anticipated capital growth has
already been priced into property.” Moreover, Mr Young believes that a
stronger driver of house prices in the East End is the health of the City.
“Canary Wharf drives East London house prices, not the Olympics,” he says.
Mr Young has recently sold 19 units in a Shoreditch development due for
completion this summer. Prices at Union Wharf, on the banks of Regent’s
Canal near Broadway Market, have risen considerably since the units were
first sold off plan, shortly before London’s winning bid was announced. “We
had one-bedroom flats of around 500 sq ft selling for £210,000 in the summer
of 2005,” Mr Young says. “Now they are going for around £250,000.”
Three-bedroom duplexes, originally sold for about £315,000, now go for
£365,000.
“I think in this area of London, a key driver is the fact that a Tube station
will open in 2010 just minutes away from our development,” Mr Young says.
And this, he admits, can be linked — at least in part — to the Olympic bid.
“Infrastructure improvements are very important, and with the Olympics
coming to London, you can at least be sure that these improvements are going
to happen; they’ve talked about it for years, but now we can be confident
that the work will go ahead.” Hackney will also benefit from the arrival of
the Tube when Dalston station opens, also in 2010. Already Hackney’s star is
on the rise; Tesco opened its doors on Kings-land High Street last year, and
Marks & Spencer is rumoured to be planning a return to the area,
possibly to Dalston Lane. The Art Deco London Fields Lido, once an East London institution, has reopened after a ten-year closure.
Anne Currell, the managing director of Currell Residential, who is a Hackney
resident herself, believes in the Olympic effect. “Winning the 2012 bid has
had a ripple effect on Hackney and East London,” she says. “Increased price
rises are expected over the forthcoming years. The new infrastructure which
will come with the Games, and the area’s proximity to the Olympic Park
itself, will havea significant impact.”
Like Mr Young, Ms Currell believes the main driver of Hackney house prices has
been the strength of the City. “Buyers have rediscovered this wonderful
oasis of Victorian housing available in Hackney and have realised that it is
closer to the City, as the crow flies, than Clerkenwell,” she says.
Moreover, property remains relatively affordable — even for first-time
buyers. Good period conversions of two-bedroom flats go for £250,000, while
very good ones go for £275,000, and those with outside space will sell for
between £300,000 and £325,000. Currells is selling a top-floor, loft-style
apartment in a brick Victorian building for £349,995. The apartment, which
extends over 1,000 sq ft, has two reception rooms, a large double bedroom
and a small attic room that could be used as a second bedroom or study.
GAMEON
THIS two-bedroom loft-style apartment in Hackney, left, is on the market for
£330,000. Two years ago, shortly before London was named as the site for the
2012 Olympics, you could have bought it for £260,000. “The Olympics have
been a great positive for Hackney”, says Nick Robinson of the estate agent
Blake Stanley. “Hackney is getting overspill now from Hoxton, Islington and
Shoreditch. Before the Olympic decision, that would never have happened.”
The last four Olympic host cities have had average house price increases of 66
per cent in the five years before each city’s games. Barcelona did best of
all, with property prices climbing 131 per cent — 49 per cent higher than
the national average — in the five years leading up to the 1992 games.
Sydney, where prices rose 50 per cent in the run-up to its Olympics in 2000,
now has one of the most expensive property markets in the world: it takes
8.5 times the average Sydney income to buy the average Sydney house.
Although house prices rise rapidly in the run-up to an Olympic event, there is
a danger of a postGames slump. House price growth in Athens, home of the
2004 Olympics, slumped from almost 30 per cent in 1999 to less than 1 per
cent in the year of the Games. Blake Stanley: 0845 0132017
