Build it and they will come. That’s the very assumption that supporters of the new Crossrail train line in London are banking on. According to Laura Bliss of CityLab,
“in transportation planning, the logic is pretty consistent: build a rapid transit station, and land values are supposed to jump up.”
The new rail line already has many anticipated benefits including higher property values, better public awareness of more historic and unfashionable areas, and reliable commuter access, with a reduction in travel times.
The first study for the project was published in November 2000 by London East-West outlining the scope and impact the system may have on the outlying communities, but it wasn’t until May 2009 that the initial construction phasing actually began. Several issues over the last 9-10 years have delayed completion, including the failure of voltage systems as well as setbacks due to tunneling issues. Station delays have also contributed to pushing the project past its original completion date2.
The most recent delay in 2018 pushed the opening date to fall 2019, and further budgetary issues and testing required has a target for the end of 2020 before the line is fully operational4.
While many rejoice the benefits of the system, the cost of the project has been a large overlay to the city’s continuous plan for urban redevelopments and regeneration. The project has left a large hole in Transport for London’s budget, which stands around ￡1 billion, with overall projected completion cost of￡17.6 billion.
Still, the economic growth in the capital is highly influenced by transport planning and the new Crossrail is no exception3.
“London’s greatest successes have been catalytic projects within the existing city fabric that the public realm while generating new developments that attract new residents and jobs,”
What is the Elizabeth Line?
The Elizabeth line is a new commuter rail system and route that covers roughly 73 miles of track, of which 13 miles will run underground. While in its construction phases, the line is being referred to as the Crossrail, but will ultimately be named in honor of Queen Elizabeth II at the culmination of the project. In continuation of that theme, the line will toute a royal purple color scheme, adding to an already vivid spectrum to London’s cartographic tube design.
There are expected to be 24 trains an hour that will connect commuters as far as Reading in the west, to central London, before continuing eastward toward Essex. Out of the 41 stations, 10 will be brand new, with some of the central stops to overlap with the Central line in hopes of alleviating traffic during the busier service times4.
As previously stated, the project was proposed in November of 2000 with its first study
published regarding the impact of the line, both beneficial and adverse, including a proposed timeline for completion. Out of the proposal emerged the Cross London Rail Links organization, a joint venture between the Strategic Rail Authority and Transport for London.
After the organization received approval, construction was able to commence in May of 2009. Consequently, after several delays and budgetary snafus, the line is confirmed to be fully operational by the end of 2020. Delays are estimated to be costing roughly ￡30 million a week forcing the organization to tap into emergency funding.
Commuters can expect an increase in carrying capacity of about 10% to the overall capital network, with a reduction in energy consumption by around 30% for the new carriages. Other amenities include free Wi-Fi and 4G connection. Seating will include more room around window spaces and accessible features for physically disabled patrons.
Figure 1 – Elizabeth Line Map4
Source: Transport for London
How Will the Line Effect Housing Prices?
With the completion of the Elizabeth line to occur in the near future, homeowners are already seeing a positive impact to their property values and new homebuyers specifically are excited as the project has opened up more alternative purchasing possibilities than the saturated central London market.
“Houses currently located near train stations in central London are very expesive” and, consequently, this has left many first time homebuyers looking further outward, away from the city and towards the western and eastern outlying neighborhoods for affordable housing options. These outlying homes will now have access to reliable public transit, thanks to the Elizabeth line, providing added value for new buyers and existing homeowners.
As newer rail systems, like the Elizabeth line, can cut down on commutes, more and more citizens will move outward from the city. Planners predict that around 1.5 million more people will be living within 45 minutes of central London. As the demand for housing near stations intensifies, property values will continue to rise.
Data shows that between December 2008 and December 2018, the average property selling price in London, overall property types (detached, semi, terraces, and flats), increased over 90% from £357,828 to £680,196. Terrace and flat properties were impacted the most, with detached the least affected. Median housing prices also increased as a result, with the average flat costing £457,500.
An uptick in property values over this period could be directly correlated with the installation of this new transit infrastructure, which is now loosely being referred to as the “Crossrail effect.” Over the last two years specifically, price growth has been significant. Along the eastern side of the new Crossrail route, growth around 12 of the 21 stations has been around 20%. Essex, in particular, appears to be one of the faster-growing areas. Shenfield appears to be a “popular choice with families moving out of more central parts of east London in search of larger homes, great schools, and a quieter way of life…” Being more on the expensive side, properties can go for between £800,000 and 900,000 for a 20-25 year old four bedroom house8.
In central London, housing prices remain trending in a positive trajectory, however, growth has not been as explosive as some of the other outlying regions. The new Elizabeth line has pulled buyers from more satured (and expensive) areas in the city toward more affordable housing in bordering neighborhoods that are becoming the new hotspots for the next generation of home buyers and real estate investors.
John Goodall, chielf executive of Landbay mentions that “infrastructure is a key driver of tenant demand, so rents and property prices along the planned line quickly followed suit7.”
Plans for a Crossrail 2 were announced in 2013 and were also met with favorable sentiments. However, talks of delays for this project have also caused scrutiny by tenents and actually negatively impacted growth (in the short term). Much like the Elizabeth line, delays could provide opportunities that investors can leverage. Investors can expect that once issues with the project begin to resolve, with completion becoming more likely, prices will gradually start to increase again.
In essence, landlords should also be optimistic of the overall project. Rob Bence of The
Proeprty Hub reminds us to keep in mind that with “property prices and major infrastructure, there are usually two spkies – one after the initial announcement and one on completion7.”
Outside of these spikes, overall value of this infrastructure will continue to drive positive price growth in housing prices for years to come.
If you are an investor looking to tap into this explosive market, consider Pixel for your inventory reporting needs. Pixel provides reliable and fast inventory services in the greater London and surrounding areas, covering all London postcodes. Tey offer 24/7 booking online and tailored clerk access arranged around your needs, with a 48 hour turn around.
Summary
The Elizabeth line has been a tremendous undertaking with a high price tag. The ￡17.6 billion esimtate completion cost for the project has come at a great expense, with ongoing delays pushing the cost, of both time and money, higher and higher. However, the billions spent will ultimately help propel growth in the housing market, acting as a powerful regenerative force for the city.
As commuters find that travel times decrease, new buyers will see good value in buying homes in the new upincoming epicenters along the route. Essex is poised to continue growing at rapid rates and other areas are following suit. Thus, not only has the line had a postive impact on housing prices, it is impacting the public awarness of areas that may have been historically overlooked by new buyers.
House hunters should continue to look at the new system as an opportunity to invest in the surrounding real estate market. Once completed, another initial pop in housing prices should occur, followed by steady growth for the forseeable future. Housing prices have already experienced benefits from the line, which hasn’t even been completed yet.
Furthermore, as this new transit infrastructure proves successful, other similar major infrastructure projects present future investment opportunities. A Crossrail 2 has already been proposed and set in motion.
However, patience and timing may be the key in consideration of all the issues the came up with the first project. Nevertheless, if the project does come to fruition, property owners can expect to see similar “Crossrail effects.”
