The office on national statistics (ONS) have recently released a report that claims that a town’s proximity to London is one of the top 3 factors that affect a property’s value.
The data presented by the ONS and recorded in 2019 found that towns within 200km of London saw prices drop by around £50,000 average for every 50km further away they were. This was evidenced by some examples of properties that were located 18km from London. These properties had an average house price of £416,800, dropping to £359,000 for towns 50km away, £288,500 for towns 100km away, and £241,000 for those around 150km from London. Quite a significant jump, I think we can all agree.
So those are the facts from 3 years ago. What can we draw from these and what can we expect in the next few years?
Clearly there is a disparity between property prices in or near the capital and more central and northern English cities and towns, but this has been the case for a long time and was hardly unexpected. Higher salaries and more job opportunities in London encourages more potential buyers to the big city and naturally demand for property has pushed property prices up. Living outside of the city and commuting is an attractive option if you don’t want to pay an astronomical amount for a home. However, judging by these ONS figures, the closer the area is to London and the easier it is to commute, the prices in the area are rising almost as quickly as London itself.
What are we likely to see moving forward in London and further afield?
We may sound like a broken record, but the COVID-19 pandemic will undoubtedly have a huge impact on these figures. Content manager at Oportfolio Mortgages Louis Mason had this to say:
“We would be very naïve if we thought that the pandemic wouldn’t do anything to these figures moving forward. Just look at how many people have gone from office-based working to completely remote working since the pandemic began.
Now that people have proven that they can do their jobs home based, for a lot of people this is enough to encourage them to move out of the big cities and work from home. I personally know someone who worked in an office in central London five days a week from 8am until 6pm pre pandemic.
The office closed at the start of the first lockdown and all staff were expected to work remotely until further notice. After 6 months of working from home, my friend’s employer closed their physical office permanently and told all staff that they were to work from home permanently.
My friend still earns a good salary and technically works for a London based firm but, she now lives outside of London. Just imagine how many people have done this as well. Surely this will have some sort of an impact on property prices in and around London?”
What does this mean for properties with good transport connections to London?
Don’t worry! It’s not all doom and gloom. Yes, the pandemic and people exiting the capital are likely to impact London properties or properties in close proximity but what will be interesting to see is what will happen when HS2 opens.
HS2 is the new high-speed railway line currently being built across the country. This ultra-speedy rail will cut travel times from major UK hubs to London significantly and we think that this will be very important when it comes to property prices.
Birmingham will become a major base for the HS2 phase 1 line which will take travellers to London in 52 minutes (quicker than it takes some people to commute across London in the morning for work!)
We predict that this easy access to London will send Birmingham house prices through the roof, even with more people working from home than ever. The allure of owning a property in Birmingham and being able to travel to London in less than an hour will be very attractive.
But it’s not just midlands-based properties that will see an increase in value with the opening of HS2. Phase 2 of the line will take travellers from Manchester to London in 1 hour and 7 minutes and we also predict a similar upward trend in house prices there too.
We still have about another 10 years until HS2 phase 1 & 2 open, but it will not surprise us if we start seeing property prices creeping higher in these areas than we would normally expect.
If you or someone you know is either looking at purchasing in London, near London or wants to discuss rising property prices, please give our friendly advisors a call today on 020 8877 1169.