For many big infrastructure projects in the UK, the talking tends to go on much longer than the actual building. But in early 2020, and quickly overshadowed by the onrushing pandemic, High Speed Two (HS2) was finally given the go-ahead.
While homeowners close to the proposed route had already endured years of uncertainty, it was only after the scheme was given the official seal of approval that the impact of the development has really been felt. Those living next to the proposed line, rather than near a station, will bear most of the costs and fewer of the benefits. Our analysis of housing markets along the line shows that since 2019 the construction of HS2 has been a drag on nearby markets. The evidence suggests that homes within a mile of the track are now consistently less likely to change hands than those further away. Since the scheme was approved, the number of homes sold within a mile of the proposed line has lagged the numbers sold further away by an average of 8% in the year. This means that outside London (where the HS2 route is new track) around 1,000 fewer homes are sold annually within a mile of the HS2 route than if sales had tracked broader market trends.
HS2 has, however, had a much smaller impact on prices than transactions. Values within a mile of the line rose 3.0% more slowly (or by around £8,000) than the wider average over the last three years. There is a slightly smaller effect between one and two miles away from the route, and minimal impact visible beyond this. Prior to 2019, there was very limited evidence that prices along the proposed route grew any more slowly than places further away or the national average. This likely reflects that fact that homeowners are rarely willing to sell their home for less than they think it could be worth in a few years time, when the work comes to an end.
Our previous analysis of HS1 construction suggests that there will be a fairly limited recovery in transaction levels until works are complete and when potential buyers can assess the impact that the new railway may have on their would-be home. The impact of this freeze in transactions has been driven by some vendors being unwilling to reduce their house price to compensate for potential or perceived disruption.
However, the experience of HS1 also suggests that transaction levels will recover relatively rapidly to pre-construction norms once works have been completed and the impact of potential disruption becomes clear. By this point, the dust from the disruption works will have long settled and buyers who were worrying about potential disturbance often find that their fears were unfounded.
