News from Cass Business School

House Price Values Jump £1.4 billion As A Result Of Hosting London Olympics

Monday, 23 November, 2009

Home owners in the five host boroughs for the London 2012 Olympics are enjoying a boom in the valuation of their properties which has seen property prices increase by up to five percent as a result of London hosting the 2012 Olympics, according to a new Cass study.  These property price increases total £1.4 billion in value, equivalent to 15 percent of the total budget for the Olympics.
This study by Dr Georgios Kavetsos from Cass was based on more than 10,000 manually-collected observations of properties in 27 London boroughs, including the five London host boroughs, between 2001 and 2007.  Several characteristics of each property were observed, including price, location, number of bedrooms, how big the property is, whether it is a newly constructed one, the type of the property (whether it is detached, semi-detached, or terrace), its proximity to public transport links and regional crime levels.
The study also showed that the properties geographically closest to the main Olympic stadium had the highest valuation increases, with this effect reducing by 0.4 percent per mile of distance that the property is away from the stadium.
Those properties within a three mile radius of the stadium have observed a five percent increase, with those three to nine miles away seeing an increase of two percent in the valuation of their property since London was announced as the host city of the 2012 Games.
The research shows an average valuation increase of 2.3 percent throughout the five London boroughs designated as official host boroughs.  However, if Greenwich is removed from this analysis as it is not scheduled to undergo any major regeneration as part of the Games the increase rises to 3.3 percent.
Dr Kavetsos says: The statistics from this are undeniable the impact of hosting the Olympics in London has had a substantial impact on the valuation of property prices.  While this is no doubt great news for property owners, it does generate questions about what kind of social impact will this have.
The areas within the Olympic boroughs are some of the most deprived regions in the UK and any increase in property prices will not only make it difficult for first time buyers to get on the market, but it will also increase property rents.  Rather than solving any problems with social deprivation, a regeneration strategy anchored to the Olympics will actually just transfer the problem to somewhere else.
Furthermore, there are issues regarding the financing scheme of the Games, although proposing that owners of properties in proximity to event facilities should contribute more towards funding the event should be the focus of further research.

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