Press release | Mind the Gap: Buy near a tube station for better house price growth

Properties near tube stations have the best price growth, according to new research by property advisory company CBRE.

London, 27 August 2019

  • CBRE research - house prices near London Underground stations (zone 2 and outwards) have grown by nearly 11% annually over the last 20 years, above a 9% rise across the wider borough that the stations sit in
  • The strongest price growth uplift of just over 3% was found around the Jubilee line and the DLR, areas which have undergone significant regeneration
  • CBRE’s analysis also looked at average annual price growth in areas around National Rail and TfL rail stations in London, and found a similar overall uplift, at 1.7% per annum
  • The findings indicate that paying a premium for transport convenience is an investment that is likely to outperform the wider area over the long term
  • Areas to watch include near new Underground stations and rail links, including Crossrail
  • Living close to public transport links is set to remain a strong preference in London, and in other cities including Birmingham, Manchester and Leeds, as more people abandon private cars in favour of alternatives like public transport and cycling, and also require good public transport links to support flexible working patterns

Properties near tube stations have the best price growth, according to new research by property advisory company CBRE.

The research compared price growth over the last 20 years of homes within 500 metres of a tube station - equivalent to a short 5-7 minute walk - in zone 2 and outwards, with average prices in the relevant local authority. CBRE found that house prices near these tube stations have grown by 2.1% more per year than the local authority average.

Over the 20-year period from 1998, prices of homes around tube stations grew on average by 10.9% per annum, which was 2.1% above the local authority average of 8.8%.

The results were broadly consistent across all tube lines, but the strongest uplift of 3.1% above the wider borough were found on the Jubilee line and the DLR. These are lines which have stations in areas of widespread regeneration, like Stratford, Canary Wharf and Canning Town. Homes near District Line stations experienced the weakest growth uplift. However, prices near District line stations still outperformed the wider market by 1.2% above the borough average of 8.6%.

Segmenting the analysis to separate the periods before and after the global financial crisis indicates the uplift in the latter period (after 2009) was higher, at 2.7% per annum. 

CBRE’s research also looked at average annual price growth in areas around National Rail and TfL rail stations in London, and found a similar overall uplift, at 1.7% per annum.

 

Jennet Siebrits, Head of Residential Research, UK, CBRE, comments:

From its humble beginnings in 1863 when the Metropolitan Line opened its 3.7 mile stretch of track, connecting 7 stations from Paddington to Farringdon and carrying 9.5 million passengers a year, the London Underground has grown into the most important mode of transport for London’s commuters. It now carries over 5 million passengers a day on 12 lines, with 300 stations and over 270 miles of track.

Mind the Gap’ is a familiar safety warning for London underground passengers. But for house buyers and investors, it’s the gap between the price growth of properties near tube stations and the wider area that’s caught our attention.

We know that people will pay a premium to live close to great transport links. Recent analysis by Nationwide showed properties close to transport hubs achieved a £42,000 premium. But both owner-occupiers and landlords are interested in how this investment is likely to perform over time. The good news is CBRE research shows that the investment pays off, and over time price growth of properties near tube stations outperforms other homes in the wider area by 2.1% per annum.

For buyers, it’s good to know that paying a premium for transport convenience now is an investment that will appreciate greater value in the long term. Similarly, for investors looking for properties that will have good rental returns and attract tenants, they have the added assurance that properties are likely to outperform against the wider market.

The tube lines with some of the best house price growth are in areas where there has been infrastructure investment and wider regeneration, which also has a positive impact on price. For instance, the extension of the Jubilee Line to Canada Water, Canary Wharf and Stratford in zones 2/3 has coincided with widespread regeneration. Prices of homes near Jubilee line stations grew by 3.1% more than the local authority average, and they are among the most desirable places to live.

Developers have been able to unlock value in areas set to benefit from infrastructure investment, as part of wider regeneration and placemaking. Areas to watch include near the new Northern line stations and the proposed Bakerloo line extension, as well as the much-anticipated Crossrail.

 

Commuter behaviour

The introduction of the congestion charge 15 years ago has resulted in a 30% reduction in congestion in the zone, while traffic in central London has since remained stable or declined by a small amount each year. CBRE research shows that since the introduction of the congestion charge, the gap between price growth of properties near a tube compared with the wider area has increased, from an annual average uplift of 1.9% 1998-2009, rising to 2.7% annually after 2009. With the introduction of the ultra low emission zone in April 2019 adding a further charge on older private cars, there is now even more impetus to switch to public transport.

 

Jennet Siebrits comments:

The congestion charge has influenced London commuter behaviour, and it is one of a whole range of trends we’re seeing here and in cities around the world. Switching to public transport or cycling is also driven by the desire to live in greener, cleaner cities with better air quality. Wanting to live close to a tube station is also a consequence of the rise in flexible working patterns, including working from home and travelling to central London for meetings, or working from flex spaces in different locations.

 

House price growth along the Tube network

Average annual house price growth, within 500m of a tube station, zone 2 and outwards, last 20 years (Q4 1998 - Q4 2018)
Tube line Within 500m of tube station London borough average Outperformance, tube station vs borough
Bakerloo 10.6% 8.6% 2.0%
Central 11.4% 8.7% 2.7%
Circle 11.2% 9.1% 2.1%
Docklands Light Railway 12.5% 9.3% 3.1%
District 9.8% 8.6% 1.2%
Hammersmith & City 10.7% 9.1% 1.6%
Jubilee 12.0% 8.9% 3.1%
Metropolitan 10.&% 8.3% 2.5%
Northern 10.2% 8.5% 1.7%
Piccadilly 10.3% 8.4% 2.0%
Victoria 10.7% 9.1% 1.6%
All lines 10.9% 8.8% 2.1%

 

 

New homes developments near tube stations include Grand Union in Brent, London Dock in Wapping, Brunel Street Works near Canning Town and White City Living.

 

For more: Tube line analysis interactive map

/Ends