In the capital, people will pay a premium to live near great transport links, and as we’ve seen from Crossrail and Crossrail 2, they play a pivotal role in boosting house prices.
So what affect will the new Night Tube have on the London property market?
Will the Night Tube drive up London house prices?
Yes I believe it will, but mainly in areas further out from central London, so from Zone 3, 4 and 5 outwards. At the moment it’s too early to predict an overall price increase.
The Night Tube will appeal to young professionals who work and play in central London but can’t afford to buy in Zone 1 or 2.
The new 24-hour service will mean they can push further out to more affordable areas, while still maintaining the lifestyle they want, and without spending a fortune on taxis.
Which stations are the ones to watch?
When Crossrail plans were announced, there was a huge spike in demand from both tenants and homebuyers wanting to move into the chosen areas while prices were still affordable, and we expect a similar rate of demand for areas on the Night Tube when the service is fully rolled out.
Dataloft and Sellmyhome have recently forecast that property prices within half a mile of Night Tube stations will increase by 5-10% above the general rate of growth in the nearby area.
This is in line with the rate of growth we have seen in areas affected by Crossrail.
Most Londoners will have considered Zones 4 onwards out of reach, but the Night Tube has opened up new possibilities. We expect areas at the end of the lines to see the biggest property price rises, such as Cockfosters, High Barnet and Walthamstow.
The Central Line is one of the quickest lines, connecting the east to central London in a flash.
It's this fantastic transport link, along with new infrastructure investment and regeneration, which has pushed house prices up in east London at a quicker rate than anywhere else in the capital.
Now the Night Tube has arrived, we expect demand for hotspot areas such as Leyton to be ever stronger than it already is.
You’ll currently pay around £290,000 for a one-bed in Leyton in Zone 3, and now the Central Line is operating 24-hours-a-day on weekends, easterly residents will have the luxury of being just 20 minutes away from the bright lights of the city.
Historically, High Barnet has been seen as a residential, family area, but regeneration and the building of contemporary new builds has attracted a wave of young professional renters and homebuyers to this part of north London.
The Night Tube will further increase the area’s popularity with a younger demographic.
Thanks to redevelopment of the town centre, an influx of new shops, bars and restaurants, and a handy location of the edge off the Victoria line, Walthamstow has transformed from an undesirable and scruffy part of town into a hotspot for late twenty-somethings.
It has seen huge capital growth in recent years and is already a hotspot for first-time buyers and investors, but the Night Tube will only enhance this desirability.
Sean Hewitt, Manager of our Walthamstow branch, believes smaller one or two-bedroom properties will see the biggest increases, as these are likely to be in demand by the demographic using the Night Tube.
Cockfosters is an area that has experienced strong capital gains over the past year due to the fact it’s affordable, has a wealth of green spaces, instant access to the M25, and the
Piccadilly line into London; but it’s the Night Tube that could really put this area on the map.
Currently the area offers more houses than flats, and a greater proportion of new builds here are houses to accommodate this demand.
The area draws in young professionals and families who want affordable housing and schools, but who also yearn for central London at the weekends when they can get a babysitter – which is why the Night Tube will certainly have a positive effect on demand for housing in the area.
Currently, Tottenham Hale is one of the cheapest areas to buy property along the Night Tube route, with the average cost of a one-bedroom property standing at around £300,000.
It’s already a first-time buyer haven, but we expect demand to strengthen now that the area has access to a 24-hour Tube service.
What’s more, Crossrail is set to launch in Tottenham Hale in 2017, and it’s a proposed Crossrail 2 station, too.
With infrastructure improvement comes regeneration, and regeneration pushes up property prices, so Tottenham Hale is certainly one to watch.
Investing along the route?
If your clients want to invest in a buy-to-let property along the line, look at the demographics of an area, and choose a location which is popular with young professionals or young families looking for larger properties within their budget, who also want the option of a central London evening lifestyle.
Typically, it’s young professionals and families who want the best of both (i.e. affordable housing or rental prices and a central London lifestyle), so make sure your client is looking in an area that appeals to these demographics.
The migration of young professionals to outer zones will continue as the areas become more accessible, which will in turn spur regeneration and push up rental and property prices.
In other words, investing in the right area could produce excellent rental yields and capital growth.
Which areas on the edge of the Night Tube offer the highest yields?
Hounslow West** | Piccadilly Line | Zone 4 | Current highest yield: 5.3%*
Hainault | Central Line | Zone 4 | Current highest yield: 5.2%*
Stratford | Jubilee Line | Zone 3 | Current highest yield: 5%*
Tottenham Hale | Victoria Line | Zone 3 | Current highest yield: 4.8%*
Stanmore | Jubilee Line | Zone 3 | Current highest yield: 4.8%*
Walthamstow Central | Victoria Line | Zone 3 | Current highest: 4.7%*
Cockfosters | Piccadilly Line | Zone 5 | Current highest yield: 4.4%*
Brixton | Victoria Line | Zone 2 | Current highest yield: 4%*
Morden | Northern Line | Zone 4 | Current highest yield: 4.4%*
Edgware | Northern Line | Zone 5 | Current highest yield: 4.1%*
High Barnet | Northern Line | Zone 5 | Current highest yield: 3.8%*
Ealing Broadway | Central Line | Zone 3 | Current highest yield: 3.7%*
*Rental yields quoted here are statistical assessments taken from Portico’s Interactive Yield Map on 23/08/16. They are not guaranteed and may be lower if the property does not achieve continuous occupancy.
**Unfortunately we don't have enough data to make a meaningful assessment about the yield in Heathrow, so we have found the yield for nearby Hounslow West instead.
Mark Lawrinson is Regional Director of Portico estate agents