London home buyers are willing to pay a substantial premium to live near a tube or train station with homes within 500 meters commanding some £42,000 more compared to one 1,500 meters away.
On average, London houses closest to Circle line stations are the most expensive while those nearest the Metropolitan line are cheapest, according to the research by the Nationwide Building Society.
The Nationwide examined how the proximity to a tube or railway station impacted property prices in Greater London after taking account of other property characteristics, such as property type, size and local neighbourhood type.
‘Our research illustrates that people are willing to pay a significant premium to be close to a station, and suggests that this premium has increased relative to two years ago when we last explored the issue,’ said Robert Gardner, Nationwide’s chief economist.
In general the premium that buyers are willing to pay increases as you move closer to a station. A property located 1,000 meters from a station commands a 4.9% premium, whilst at 750 metres this increases to 7.6% and 10.5% for a home 500 meters from a station.
The report points out that just 6% of properties in London are more than 1,500 meters away from a station, and the vast majority of these are in outer suburban areas, where stations tend to be more spread out serving larger catchments.
Excluding the City of London, Camden is the borough best served by the tube and rail network, with 85% of properties within 500 meters of a station. Whilst Camden has always benefited from a high density of tube stations, it has also recently seen improved rail services thanks to London Overground. However, it is also one of the most expensive areas of the capital, with average prices currently around £843,000.
Havering, Bexley and Barking and Dagenham are amongst the least connected boroughs, with fewer than 20% of properties within 500 meters of a station. Average house prices tend to be lower in these areas, but this also reflects that they are further away from central London.
Amongst the outer boroughs, Brent stands out as having good transport connections, with more than 50% of properties within 500 meters of a station. Brent benefits from access to a number of tube lines, with the Metropolitan, Jubilee, Piccadilly and Bakerloo all passing through.
The research also looked at which tube line is associated with the highest house prices. The Circle line serves the capital’s most expensive areas taking in much of central London and also parts of west London. Average house prices are over £800,000 in areas where the nearest station is on the Circle line.
Average house prices are least expensive where the nearest station is on the Metropolitan line. This probably reflects that the line stretches towards the outer suburbs, with only a short section in central London.
The Nationwide has conducted similar research for Manchester and Glasgow, looking at the impact of rail links on local property prices. ‘London home buyers appear willing to pay a far greater premium for being close to a station compared with those in Greater Manchester and Glasgow. This probably reflects the greater reliance on public transport in the capital, with residents less likely to drive,’ said Gardner.
He also pointed out that London also has the densest network of stations and services, with 94% of properties within 1,500 meters of a station, compared with 72% in Greater Glasgow and 69% in Greater Manchester.