Dream of Olympic boost for London property prices unfulfilled

With the London Olympics opening ceremony on the 27th of July 2012, the promise of improving house prices in the areas surrounding the Olympic site has not been fulfilled. In fact, according to a new report, the housing market in the area, particularly around Stratford to the east, has: “under-performed despite high expectations and new investment.”

The key element of London’s successful bid for the 2012 Olympic and Paralympic Games was the promise of a major transformation of East London – formerly an unattractive industrial area characterised by the overhead power lines strung between large metal towers, polluted waterways, old scrap yards, piles of used cars and heaps of discarded refrigerators.

By locating the 80000-seater Olympic Stadium, Olympic Park venues and Olympic Village in Stratford, East London the Government put in motion one of the largest regeneration projects in Europe in the once ignored East End. 

The £6.5 billion invested into new rail lines, station upgrades and a major transformation of the local transport system would soon make one of the most connected parts of the capital. 

However the promise of improving house prices in the areas surrounding the Olympic site has been unfulfilled. In the contrary according to housing market analysts Hometrack, the housing market in the area, particularly around Stratford to the east, has: “under-performed despite high expectations and new investment.”  The report says: “In 2001, average values in Stratford (E15) stood at a 30-35% discount to Greater London. In 2006, the year London secured the Olympic Games – the discount had narrowed to between 10-20%. Today the discount has widened to 35%.”

Statistics from the Land Registry show house prices across London rose 5.1% year on year to April 2012, but in the east London borough of Newham, home to the Olympic Park, prices moved up just 2%. 

This is in severe contrast to Kensington and Chelsea where prices have increased  11.6% over the same period as wealthy foreign investors flock to London looking for a safe haven for their wealth.  
“With the Games now just a matter of weeks away there has been little to no impact on house prices across the area, but this is hardly surprising” says Mike Smuts, managing director of Smuts & Taylor, a South African investment firm that specialises in helping South Africans buy property in London.

Smuts points out that while there is always a debate about whether events like the Olympics actually have a direct effect on property prices in the London, research seems to show that while it may aid property values in developing cities, it has little to no effect on developed metropolitan areas like London.

“One thing that undisputed though is that hosting cities benefit from an upgrade of transport, cultural/leisure facilities and urban infrastructure which in turn encourage house prices growth. All of this is true for London and in my mind the “Olympic Legacy” as the government has dubbed it will lie in these infrastructure upgrades, and not in the event itself”  

Some of the infrastructure improvements are already complete, including parts of the 6.5 billion pound ($10 billion) investment in London’s transport system, as well as private ventures like the £1.5 billion Stratford City Westfield Shopping Centre. However, many more, such as housing projects, are still taking shape.

(Smuts & Taylor Ltd )

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