I hate to rain on anyone’s parade. Well, that's not strictly true - in fact I love to rain on anyone’s parade.
But it’s time someone talked sense about the effect of the Olympics on the housing market. In recent weeks there have been several articles talking up the value of homes in or near the London 2012 Olympics site. They’ve repeated the PR-speak and one can safely assume there will many more such pieces in the next 27 months.
Think about it. The Olympics last 16 days so an owner of a well-located property near the Olympic park may indeed make a killing from renting it out for that time. But that's a once-only windfall lasting just over a fortnight; afterwards, the owner will have not an Olympics property, but a Tower Hamlets one. As for the long-term capital appreciation 'bonus' of the Olympics ... well, where is the evidence?
The only authoritative survey I have seen on the Olympics effect on housing markets is by the Saunder School of Business in British Columbia. It makes grim reading for agents, developers and spin doctors suggesting Tower Hamlets is the new Cannes.
The study analysed house prices in Los Angeles (1984 Summer Olympics), Atlanta (1996 Summer), Sydney (2000 Summer), Calgary (1988 Winter Olympics), Salt Lake City (2002 Winter) and Vancouver (2010 Winter). Each location was compared with a similar city that did not host the games.
"There is no consistent evidence that hosting the Olympic Games results in either higher or lower housing prices and, as well, there was no pattern for an effect during the announcement of the city, the lead up to the games, or the period following" says the study. "More than anything else, our findings argue that hosting the Olympic Games is not about economic benefit” it states.
Whoops. There goes years of PR speak talking up the Olympic effect on London.
Of course, vastly improved transport links, new amenities and cosmetic improvements will boost the attractiveness of the area. But it will still be East London which, although lovely to many, has not got the capital appreciation or rental yield track record of many other parts of the capital.
Developers and some agents admit, off the record, that they have factored improved transport into current asking prices anyway, so today's buyers should not expect significant appreciation even when the roads, trains and bus lanes are complete.
Investment buyers will, of course, get a marvellous view of a used-once velodrome. But their individual pursuit will be for tenants, rather than medals, once the games close on August 12 2012.
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