If you’re planning on investing in London property, it pays to know about upcoming transport plans and improvements. As despite the fact that house price growth in London is likely to slow over the remainder of the year, London locations set to get a travel upgrade are defying gloomy Brexit forecasts and seeing house prices steam ahead.
Here we take a look at London’s upcoming transport plans and proposals - plus highlight a few areas that are expected to lead the market over the next few years.
Northern Line Extension to Battersea
Tunnelling work on the £1.2 billion Northern Line extension to Battersea Power Station begins this month!
The Northern Line will soon be extended to Battersea via Nine Elms, set for completion in 2020. The historic Tube extension (which is the first since the 1990s) will bring Battersea and the surrounding areas within 15 minutes of the West End and City.
“Despite 2016/2017 market changes, I’ve seen a lot of interest in pre-owned properties in the Battersea and Nine Elms areas. The interest is mainly from investors looking at long-term capital growth, wanting to place their money in an area which is most certainly going to see healthy increase in values. When the Northern Line extension is complete, south London is going to be blessed with a new ‘Kings Road’ equivalent High Street and Battersea’s first Underground station. Battersea is a fantastic area to live, but currently it lacks high end shopping and a Tube, so when both arrive in the next few years, ‘Nappy Valley’ will be even more desirable to investors, homeowners and renters.’’ Luke Parle, Battersea Sales Manager, Portico.
£220m investment in Beckenham, South Norwood and Lewisham
The mayor of London, Sadiq Khan, is pledging a staggering £220m for local transport and regeneration improvements in up-and-coming south east London. Several major projects have been outlined to begin in 2017/18, including a £1m refurbishment of Beckenham town centre, creating greener and safer cycle paths in South Norwood, plus pumping money into improving the junction of Sangley and Sandhurst Road in Lewisham.
“The Mayor’s plans will certainly improve south east London’s desirability. We’ve seen house prices in central London reach an inconceivable peak in the last few years, causing many people to reassess just how centrally they need to live. Subsequently, areas like Beckenham and Lewisham are starting to appeal to a much wider range of buyers.” Tony Chryseliou, Dulwich Sales Manager, Portico.
This pocket of south east London is an attractive buy-to-let spot too - with investors keen to secure property in the area despite increased stamp duty and tax changes. Landlords can find a strong 4% yield* in Beckenham, with certain pockets on Wickham Road achieving 4.3%*. And yields are even higher in Lewisham; landlords can secure a 4.5% yield* in the area around Lewisham and Ladywell station, and a 4.8% yield* in the Deals Gateway area around Deptford Bridge station. In comparison, landlords looking to invest in central London can expect much lower yields of around 3%*.
Extending the Bakerloo Line
South east London’s popularity is already on the rise, and now TfL are proposing to extend the Bakerloo line beyond Elephant & Castle to Lewisham, serving Old Kent Road and New Cross Gate. The new route would include four new stations, two on Old Kent Road, another at Lewisham and one more at a key interchange at New Cross Gate. If the scheme is given the green light, (and funding is secured), construction could start in 2023 with services aiming to be running by 2028/29 - so there’s a fantastic long-term opportunity for investors here.
The Night Tube effect
The Night Tube is now running Fridays and Saturdays on the Victoria, Jubilee, and most of the Central, Northern and Piccadilly Lines. The 24/7 line has certainly opened up new possibilities, bringing new demand and a wave of renters to areas previously considered too far out - such as Cockfosters, High Barnet and Walthamstow, but as of yet, it has not had a big impact on property prices
“The migration of young professionals to outer zones will continue as the areas become more accessible, which will in turn spur regeneration and make certain areas more desirable to renters.” Mark Lawrinson, Regional Sales Director, Portico.
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The Crossrail timeline
Crossrail - now known as the Elizabeth Line - has powered remarkable regeneration across London, as well as estimated to have added £5.5 billion to property prices along its route.
The new Elizabeth Line route is creating 10 new stations at Paddington, Bond Street, Tottenham Court Road, Farringdon, Liverpool Street, Whitechapel, Canary Wharf, Custom House, Woolwich and Abbey Wood. When the line launches, it will link many London areas to Canary Wharf, from Heathrow in the west to Abbey Wood in the east.
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Here’s an update on the progress of the east-west line:
- May 2017: The first new Elizabeth Line train enters passenger service between Liverpool Street Main Line and Shenfield.
- May 2018: TfL Rail service opens between Paddington (National Rail) and Heathrow Terminal 4, replacing the existing Heathrow Connect service and part of the Great Western inner suburban service.
- December 2018: The Elizabeth Line opens between Paddington and Abbey Wood, Liverpool Street to Shenfield, Paddington Main Line to Heathrow Terminal 4.
- May 2019: The Elizabeth Line through service extends from Shenfield to Paddington.
- December 2019: The Elizabeth Line is fully open, extending to Reading and Heathrow Terminal 4.
“Investors will still benefit if they buy along the Crossrail route before it launches, but not nearly as much as those who invested immediately on hearing the news. The rate at which prices are increasing in ‘Crossrail areas’ has somewhat levelled off, but investors can still expect a healthy price growth compared with the greater London average over the next few years. Furthermore, as the areas become more accessible, investors will also benefit from a larger supply of prospective tenants, which will translate into higher rents and minimal void periods.” Vatche Cherchian, Regional Director, Portico.
Crossrail 2 is planned to serve stations throughout the South East, linking south west (Wimbledon) and north east London (Tottenham Hale), as well as destinations across Surrey and Hertfordshire. The new railway is also set to support the regeneration and development of up to 200,000 new homes across London and the South East.
George Osborne’s Budget last year granted £80 million to take Crossrail 2 forward to the planning stages, but the railway will require regular top ups of funds to stay on track for construction by 2033. As our new Chancellor, Phillip Hammond, failed to mention Crossrail 2 in his most recent Budget, some people are speculating that the Government is “going cold” on the project. The project is imperative for the long-term success of London, so we remain hopeful it will be given the go ahead.
Savvy investors will have already been looking at potential hotspots along the proposed route when the news was announced, but it won’t be until stage two when construction actually begins (if it commences) when we’ll expect to see another wave of buyer activity. We’ll keep you updated with news as we get it.
If you’d like any investment advice, or if you would like to sell or let out your property, give us a call today on 020 7099 4000. Click here for an instant property valuation.
*Rental yields quoted here are statistical assessments taken from our Interactive Yield Map on 22/03/17. They are not guaranteed and may be lower if the property does not achieve continuous occupancy.