House price growth near improved transport networks in cities in the UK, particularly trams, is higher than properties further afield, new research has found.
Edinburgh, Manchester, Nottingham and Birmingham have all seen the effect with properties near new tram and stops seeing prices up by an average of 12% in the first two years of the lines opening.
The research from Lloyds Bank also shows that house prices along the new Elizabeth Line crossing London from Reading in the West to Shenfield in the East, are up by 22% over the last two years, even although it will not be fully open until 2019.
The average house price along the Greater Manchester tram routes grew by an average of 11% from £134,266 in 2013 to £149,511 in 2015 in the two years after many of the routes opened, almost double the 6% increase recorded in the two years previously.
Since opening in 2014, the average house price on the Edinburgh tram route has grown from £199,171 to £218,350, an increase of 10%. This rate of growth is three times faster than in the previous two years before the line opened when the average price grew by 3%, from £193,976 to £199,171.
Average house prices on the Nottingham Express Transit (NET) route has grown from £114,190 to £149,884 since opening in 2004, an increase of 31%, the same as the growth rate for Nottingham as a whole.
In the two years after the Midland Metro, which operates between Birmingham and Wolverhampton, opened in 1999 the average house price in the areas served by the tram system grew from £42,253 to £52,720 in 2001, representing an increase of 25%. In the two years prior to opening, prices had fallen by 10% from £46,739 in 1997 to £42,253 in 1999.
The research suggests that the effect continues well beyond the initial opening period. Average house prices in these areas have continued to see substantial increases and have grown to £130,041 in 2016, an increase of 208%. This has comfortably outperformed the average price increase of 175% for Birmingham as a whole from £63,592 to £174,717 over the same period.
‘A new and modern transport system is potentially a great catalyst to urban regeneration and can be a game changer for cities investing in improved links. An excellent tram system can stimulate inward investment for the local economy, unlock previously hard to reach sites for development and make it easier for people to move around the city,’ said Andrew Mason, Lloyds Bank mortgage products director.
‘These are important factors for the housing market, and we can see these routes have helped boost increases in property values. Many properties close to tram links have recorded an outperformance in house price growth compared to the city as whole. Having a tram stop on your doorstep can make a lot of difference,’ he added.
The research also looked at the future impact of Crossrail, officially named as the Elizabeth Line which will begin operating in May 2017, although the full service stretching from Reading, in Berkshire, to Shenfield, in Essex, won’t be operational until December 2019.
House prices near future Crossrail stations have already seen an average increase of 22% over the past two years in anticipation of the new line, from £344,242 in 2014 to £420,798 in 2016, compared to an average 14% growth for surrounding local authority areas and a 13% rise for Greater London.
Of the 33 stations surveyed along the new Crossrail route some 28 have seen average house price growth for homes in the same postcode sector out pace than the average house price growth for the surrounding local authority areas of 14% over the past two years.
To the west of London, homes in the Burnham area have seen their average house prices increase by 40%, followed by Slough with growth of 34% and Maidenhead up 32%. These increases have comfortably outpaced the 15% house price growth for the South East region as a whole over the past two years.