What’s the Olympic legacy for London’s property market?
Has the rental market superseded the property ladder?
The official London2012 website states that ‘the Olympic and Paralympic Games have been the catalyst for the physical transformation of East London’ raising the profile of the area and bringing it to the attention of the world.
Large scale infrastructure projects, improvements to transport links, shopping facilities and local amenities have transformed previously neglected neighbourhoods and have made them more desirable. But what effect has the Olympics had on East London’s property market and London as a whole?
You might expect East End house prices in the run up to the Olympics to have increased significantly. Interestingly however, according to property website Zoopla, property in Newham (one of six dedicated Olympic host boroughs in East London) has decreased in value by 3.8% in the last 4 years. It’s a similar story for Hackney which is down 2.25% and Tower Hamlets which has increased, but only by 1.79%. This compares with the overall average for London of a 1.79% increase.
Areas such as Kensington (up 5% on Zoopla), Islington (up 3.16% on Zoopla) and Camden (up 3.37% on Zoopla) have performed better over the same time scale and remain popular with buyers and particularly with overseas investors who view London as a safe investment in volatile European and World Markets.
Notable, is an increase in sales activity specifically during the Olympic period. Estate agency Marsh & Parsons reported an increase in property sales activity throughout London, up 23% on last year’s figures and 35% on the same 16 day period in 2010.
Looking to the future and the legacy of the Games, CEO of Marsh & Parsons, Peter Rollings predicts the Olympics ‘will have a significant long-term impact on London’s appeal as a place to live for both domestic and international buyers.’
In contrast, it is the lettings market where the Olympic effect has had greatest significance. According to Property Wire, a supplier of global property news, average rents grew by nearly 40% in Newham over last year with significant growth in East London boroughs such as Greenwich (up 24.1%) and Tower Hamlets (up 18.5%) as well. The London average across all property types has increased by 22% in the same period.
However, some property experts are now predicting a decline in rental rates, with an increase in supply for the lettings market this Autumn as properties with Olympic tenants and short let tenancies now enter the market.
The role of Short Lets during the Olympics has been a significant one. Specialist home rental companies such as Vive Unique have helped pave the way for London homeowners to earn money from their homes by letting them out whilst they are away.
Vive Unique Co-Founder and Director Claire Whisker commented, ‘The Olympics has raised awareness of the potential and demand for short lets in London and has given rise to an increasing number of entrepreneurial homeowners renting out their homes. It is a growing industry and one that we have helped make more secure with the development of a bespoke insurance policy to cover our homeowners while they’re away. We expect continued interest from homeowners who can earn a considerable boost to their disposable income.’
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