Whenever there is major urban regeneration or infrastructure build, property investors get excited.
But are they right to be, and how will Crossrail 2 impact property prices? Is the development of new and faster public transport links enough to boost real estate values?
We’ve been doing a bit of digging, and have a few pointers for property investors who want to unravel the secret to successful investing in the age of Crossrail 2.
How public transport benefits property investors
Property investors have three goals: either capital growth, rental income, or both. The desirability of an area affects both capital growth and rental values, and public transport certainly affects liveability.
When it’s easier to travel to and from work, an area becomes more desirable. Demand for homes grows, and that pushes prices up. Really it’s all about lifestyle: shorter commute times mean more family time. Crossrail 2 will provide an alternative to travelling by car, and for some people, cars are already a thing of the past.
Typically, property near good transport links shows better price growth than those further out. And access to good public transport is particularly relevant to property investors as traffic gets worse on London’s streets.
However, you have to look a bit deeper than this when considering what Crossrail 2 will do to house prices.
Being in a ‘Crossrail 2 area’ could be risky
Strange as it may seem, here’s a warning about how Crossrail 2 will impact property prices: it’s not a straightforward equation. You can’t simply say, “Hey, Crossrail 2 is coming to Maldon Manor, I’ll invest there!”
Perhaps the best predictor of the impact of Crossrail 2 on property prices is to look at similar infrastructure development currently underway: and what better correlation could we hope for than to examine the effect that Crossrail 1 has had along its route?
A 2015 Knight Frank report analysed how property prices have moved along the route of Crossrail 1. This confirmed that people want to live near transport links and that this has had a direct impact on property prices. Already, before Crossrail 1 is operational, property prices within a 10 to 15-minute walk of Crossrail stations have outperformed those a little further out by an average of 5%. But this average figure masks some wide variations.
Generally speaking, prices have outperformed most in central London and less so in areas further out. However, a common theme in every location is that where the Crossrail route is augmented by regeneration and new development in the capital growth rates are way better. For example:
- In prime London locations, since 2008 property prices have increased by an average of 43%. However, residential property prices within a 10-minute walk of Central London Crossrail 1 stations have increased by 57%
- In the east, residential property prices have risen by an average of 16% in Newham but nearer to the stations at Forest Gate and Maryland have increased by around 36%.
What is clear is the level of development and regeneration surrounding the Crossrail 1 stations has positively impacted price. For example, in the west prices have grown by an average of 28% around Crossrail 1 stations compared to a 22% rise in surrounding areas. But in Acton, where the Acton Gardens residential regeneration scheme is transforming the area, property prices within a 15-minute walk of the station have increased by 77% in the last six years.
The key to understanding how will Crossrail 2 impact property prices
It’s likely that Crossrail 2 will impact property prices in a similar way to the impact of Crossrail 1 along its route. While it’s impossible to say how big this impact will be, it’s 99% certain to be positive, and it is likely to be most positive where Crossrail development goes hand-in-hand with regenerative projects within a 15-minute walk of the station. The best locations may include:
- Tottenham Hale that is benefitting from a £110 million regeneration program and has 75 acres available for development
- Clapham Junction, currently undergoing a huge £8 billion regenerative project centred around the station and Battersea Power Station
Why not take a look at the JLL Crossrail Tool and see how property prices have been developing along the Crossrail 1 route? It will give you a better understanding of how Crossrail 2 will impact property prices along its route.
Download the free guide – https://www.gladfish.com/property-investment-research/investment-research-crossrail-2-prices
