Arthur investigates the profound effects Crossrail could have on property prices within adjacent areas.
The “Crossrail Effect”
Crossrail’s plans to drastically improve journey times across London are well underway and if all the construction work goes to plan, it is predicted that the full route connecting London and the home counties of Berkshire, Buckinghamshire and Essex will open in late 2019. But before Europe’s largest infrastructure project can even begin to speed up journey times across the capital, Crossrail is already making a huge impact on property prices.
The sharp increases in housing prices along the rail route are part of what has been coined the “Crossrail effect” and according to Knight Frank’s 2015 residential research on Crossrail, prices within a 15 minute walk zone of planned Crossrail stations outperformed the wider market in all the eastern, central and western Crossrail station areas. If Ian Lindsay’s (Crossrail’s Head of Lands and Property) predictions are correct, the rail route is set to boost commercial and residential property value across the capital by a staggering £5.5 billion between 2012 and 2021.
Although prices have already increased significantly since the bill received Royal Assent in 2008, recent forecasts state that property prices along the line should continue to increase by at least 3.3% per year until the line opens. There is still huge potential for prospective investors considering jumping on the bandwagon and buying up property in the areas that are set to benefit most from Crossrail and subsequent regeneration projects. Some of the top picks are:
The Reading to Paddington train journey is said to be one of the UK’s fastest growing commuter routes; Reading council says around 24,000 Reading residents travel to London on a daily basis and this number is set to rise in coming years bringing in a huge number of commuters from villages and towns in Berkshire and South Oxfordshire. Not only is Reading pushing for “city status” on the back of Crossrail, but extensive regeneration plans for the area surrounding Reading station and its town centre have been on-going since 2013. The Station Hill development plan alone is bringing 930,000 sq ft of office space, 150,000 sq ft of retail space and more than 300 residential units within a few minutes of Reading station. In fact, over a quarter of the office space construction along the western M4 corridor is currently taking place in Reading. With property prices set to rise by 43% between 2015-2020 (JLL data), and rents expected to continue climbing, now is the time to invest in Reading and its suburbs for guaranteed returns.
Slough is one of the areas enjoying the fastest house price growth in the country and from 2019 Crossrail will cut journey times to Liverpool Street by 23 minutes. Like many other places along its route, Crossrail has provided Slough town centre with a much needed regeneration project comprising of £45 million of public investment. JLL data predicts that house prices in Slough will rise by 45% by 2020, whereas other research predicts prices to rise by up to 50%. According to Zoopla, the average home in Slough, currently worth £315,731, would rise by an incredible £148,393. Although the lack of affordable housing in Slough is an issue that is currently being addressed in the town’s regeneration plans, the property shortage in Slough could be good news for property owners looking to rent out their properties and benefit from significant rent increases in the area at this current moment in time.
Hayes & Harlington:
Hayes is another area benefitting from a regeneration project thanks to Crossrail. Like Slough, it boasts a fast connection with London’s Heathrow airport, and it is expected that many big employers will move over to Hayes in coming years. Considering its connections with the UK’s busiest airport and the arrival of Crossrail, property prices are still relatively low. This gives Hayes & Harlington great potential for capital growth and great buy-to-let opportunities for investors.
Is it too early to invest in Crossrail 2?
With proposals for Crossrail 2 still awaiting approval, the question remains as to whether it’s too early to start buying up property along the proposed rail route. By the early 2030s it is hoped that Crossrail 2 will serve stations throughout the South East, providing links between the South West and the North East of London, as well as destinations in Surrey and Hertfordshire.
Since transport links and regeneration projects have historically played a key part in property price performance it is almost certain that Crossrail 2 will mirror, if not exceed, the expectations of the current “Crossrail effect” upon London’s property market. Although its plans have experienced criticism from residents in Wimbledon and Chelsea, Crossrail 2 is continuously gathering political support and the project plans to start construction work in 2023.
Using the house price increases from Crossrail as an example, many investors believe they are taking a low risk by investing before any official financial or political commitment has been made; those who get in early are sure to benefit from the most capital appreciation. JLL’s Head of Residential Research claims that there is already evidence of land being purchased along the route with the intention of sitting on it until the time is right to offer it to house builders and developer at a profit. If prices significantly increase across the whole rail route as they have done with respects to Crossrail, those who have faith in the Crossrail 2 proposals should look to buy property in areas where house prices are typically lower and where commuter times will decrease the most (e.g. Chessington, Tolworth, Epsom and Ewell)
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