Prepare for an imminent onslaught of Olympics hype - not just about the Games (for which the hype may be justifiable) but about the event’s effects on house prices.
My inbox has had many emails over the summer from agents’ and developers’ PRs talking of the potential capital uplift for early buyers, despite a lack of evidence to this effect.
Full credit, therefore, to Lloyds TSB. Despite being a partner (code for sponsor, paying a reported £50m to £80m) of the Games, its most recent survey of prices confirms that while east London homes have risen nearly £60,000 since London was awarded the Olympic Games in July 2005, this is no better than the rest of England and Wales - and much worse than most of London.
The average house price in the East End has gone from £208,148 in July 2005 to £266,730 in May 2011 - that sounds good until you realise the same index places the average home across London as a whole as being worth £418,487.
“Looking ahead, the long-term Olympic legacy for East London of improved infrastructure and transport links is likely to help underpin house prices in the area over the coming years” says Lloyds TSB’s economist Suren Thiru.
The bank could have used the word ‘boost’ or ‘accelerate’ but the key word it did use is ‘underpin’. The implicit suggestion is that without such infrastructure improvements the area would fall still further behind the rest of the capital.
Although east London home owners are sitting pretty to some extent (their modest rise in the past six years is rather better than the performance enjoyed by out-of-London home owners, many of which are sitting on homes worth about the same as in 2005), they cannot hope to compete with the rest of the capital.
Countrywide, the UK’s largest estate agency group, is well-placed to assess London. It includes Hamptons and John D Wood in posh parts of the capital, from which it reports that some 74% of buyers are from overseas - the real reason why London’s prices are going through the roof.
So far those overseas buyers - mostly investors - have not been tempted in any great number to buy ‘Olympic view’ homes. There is a reason for this: east London may be a tremendous, diverse and lively place to live but once the four weeks of the Olympics have passed...the area will still be just another suburb, not a life-long investment haven.
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