Can you still cash in on Olympics house price boom?

Olympic stadiumGetty Images

With only five months to go before the London Olympics kick off, research from Lloyds TSB reveals homes close to the Olympic Park in east London have surged by more than £60,000 in value since London won the right to host the games.

Prices have gone up by more than £800 every month since London was awarded the games in July 2005. Dalston and Homerton in Hackney have seen the fastest growth. Is it still worth investing in the East End to cash in on the Olympics or is it too late? Will prices go up any further or have they plateaued?
The average house price across the 14 postal districts closest to the main site was £268,884 in November 2011, an increase of 30%, or £62,739, from the average of £206,145 in July 2005, according to Lloyds. By comparison, house prices across England and Wales have risen by 25% over the same period, which is an average monthly increase of £611.

Since the summer of 2005, house prices in eight districts close to the Olympic Park have risen by at least 20%. Dalston and Homerton - both in the borough of Hackney - have delivered the fastest growth in house prices, both recording increases of 55%. Shoreditch has enjoyed the next highest rise, with a 47% (£102,934) increase. Stratford where the Olympic Park is located has seen the average price climb by 13%, or £26,646, to £227,893.

Over the past year, when house prices dipped 0.3% across the country, values rose by an average of 0.5% around the Olympic Park. However, just two out of the 14 Olympic postal districts - Dalston (10.3%) and Clapton (7.1%) - have outperformed the average increase across London (5.4%) during the past 12 months. Dalston recorded the largest price rise (10.3%), while Bethnal Green recorded the biggest fall (-5.2%).

Is it too late to cash in on the Olympics?
Despite the price rises, the East End remains more affordable than many other areas in London. The typical price of a home (£268,884) is 22% below the London average (£342,551). The most affordable postal district is Plaistow with an average house price of £188,760, which is 45% (£153,791) below the London average. In contrast, Dalston (£359,436) has become the most expensive postal district.

Suren Thiru, housing economist at Lloyds, said: "Some areas close to the main site for the 2012 London Games have experienced a sharp rise in property prices, reflecting increased buyer interest as well as the regeneration taking place there. However, some areas have yet to see as marked an improvement."

So it may be worth investing in those areas, especially the ones with improved transport links, although it remains a risky game. A lot depends on how quickly the economy recovers from the long downturn.

Looking further out, Thiru said: "The outlook for the housing market in the East End of London remains relatively positive over the next few years with property values likely to be supported by the Olympic legacy of better transport links and infrastructure. However, house prices here will also be subject to the same headwinds facing the housing market across the rest of the country."

David Ritchie, the chief executive of housebuilder Bovis Homes, said things are pretty static in the housing market and this could be the "new norm". He believes both sales and prices won't move much in coming years.

Postal District

Jul-05

Nov-11

% Change

£ Change

Average Price

Dalston

£232,308

£359,436

55%

£127,128

Homerton

£214,952

£332,102

55%

£117,151

Shoreditch

£220,077

£323,011

47%

£102,934

Clapton

£217,900

£314,111

44%

£96,211

Bethnal Green

£228,425

£303,383

33%

£74,959

Leytonstone

£234,232

£304,887

30%

£70,655

Bow

£224,285

£285,163

27%

£60,878

Leyton

£181,039

£217,947

20%

£36,908

Walthamstow

£191,139

£227,036

19%

£35,897

Stratford

£201,247

£227,893

13%

£26,646

Manor Park

£202,244

£226,451

12%

£24,207

Forest Gate

£198,408

£221,412

12%

£23,005

East Ham

£186,808

£200,625

7%

£13,817

Plaistow

£179,005

£188,760

5%

£9,756

East London Average*

£206,145

£268,884

30%

£62,739

England and Wales average

£185,581

£232,592

25%

£47,011

Source: Land Registry, Lloyds TSB

*Weighted average of the 14 postal districts close to the Olympic Park

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