House prices in East End rise after Olympic win

With 2,000 days to go to the start of the 2012 Olympics, new research from Halifax Estate Agents shows that house prices in three London postal districts close to the site of 2012 Olympics games have risen by more than 15%, or at least £35,000, since London's winning bid was announced.

Across London, house prices have risen by 15% since Q2 2004.

The best performance has been in Leytonstone (E11), which saw a 23% (£50,714) increase in its average house price since mid 2004 followed by Hackney (E8) with a 21% (£48,578) increase and Clapton (E5) 18% (£38,895) rise.

Seven areas close to the Olympic site recorded house price increases of more than 10% since Q2 2006, while all areas close to the Games site have seen at least a £15,000 rise in their average house price.

Stratford (E15), the focal point for Olympic construction activity, saw an 8% (£16,801) increase in its average price since June 2004 to £225,652.

Previous Olympic host cities have seen strengthening house prices

Each of the previous four host cities (Barcelona, Atlanta, Sydney, Athens) have seen house prices rise by more than the national average over the five year period in the run-up to the Olympic games, the main period of Olympic related development activity. These host cities averaged house price increases of 66% over five years against an average rise in host nation house prices of 47% - a differential of 19 percentage points.

London

The postal district near the Olympic site with the highest average house price is Leytonstone (E11) - £275,827. The next most expensive Olympic areas are Hackney (E8) £274,948 and Clapton (E5) £258,394.

The least expensive postal district near the Olympic site is Paistow (E13) with an average house price of £196,263. This is followed by East Ham (E6) £207,543 and Leyton (E10) £210,599.

The average house price in eight of the fourteen postal districts close to the Olympic site trade at a discount of more than 25% to the average for London. These areas include Plaistow (E13) and East Ham (E6) with a 41% and 37% discount respectively.

House prices in six postal districts near the Olympic site are yet to see an "Olympic" effect with house price growth still to reach double digits since the Olympic announcement. House prices in Homerton (E9) rose by 7% over the past 15 months, while prices in Forest Gate (E7), Stratford (E15), Walthamstow (E17) and Shoreditch (E1) rose by 8% and Bethnal Green (E2) rose by 9%.

The regeneration effects from hosting an Olympic games has generally had a positive impact on house prices. Barcelona was the best performing host city with prices rising by 131% versus an 83% increase in Spanish house prices in the five years leading up to the 1992 Olympics.

Hosting an Olympics is usually associated not only with an increase in sporting facilities but also an upgrade of transport and cultural/leisure facilities. Barcelona, Athens and Sydney all saw a significant upgrading of their urban infrastructure and this city rejuvenation is likely to encourage higher house prices.

Areas close to the Olympic complex usually see the largest increase in house prices as they benefit from improved facilities and better transport links. This was clearly evident in the main area of development for the Sydney Olympics, Homebush Bay, a former industrial site 20 minutes from the centre of Sydney. House prices in the adjacent suburb, Homebush, rose 70% in the five years in the run-up to the Olympics, compared to a 50% increase in Sydney house prices.

The Manchester Commonwealth Games prompted redevelopment and rejuvenation of central Manchester and provided a spur to house prices in the area. In the five years leading up to the 2002 Commonwealth Games, house prices in central Manchester rose by 102% versus a 52% rise in prices in the North West and an 83% increase in prices across the UK.

Commenting, Tim Crawford, Group Economist, Halifax Estate Agents, said: "London's winning Olympic bid has boosted regeneration spending in the East End and this has had a positive effect on local house prices. There has been an increase in interest from first time buyers and investors alike. The strongest recent gains have been in Leytonstone and Hackney.

Despite recent rises, there are eight postal districts close to the Games site where house price are more than 25% below the London average, which highlights the area's still relatively affordable property prices."