HERE COMES CROSSRAIL

May 2022

After a decade of digging, Crossrail will finally open its doors this week. While initially it will begin running as three separate railways; Reading to Paddington, Paddington to Abbey Wood and Shenfield to Liverpool Street, from Autumn 2022, the process of turning three separate lines into a single system will begin.

From a property perspective, the impact on the market has mostly already been felt. Would-be buyers have found the Elizabeth Line fully priced in for at least the last five years. Anyone who has bought since 2016 has paid a price that already reflected the reduction in journey times that the Elizabeth Line will offer. In fact, given some would-be sellers (particularly investors) have sat on their hands until it’s running to cash in, stock levels will likely rise over the next few months.

Buyers whose decisions are primarily swayed by the Elizabeth Line today are typically those who want to use the links from day one. Investors bought in relatively large numbers between 2014 and 2016, hedging their bets that prices in the areas would outperform. They generally did, with the strongest house price growth surrounding stations on the south eastern and north eastern spurs. While this is reflective of the new links, it was also partly reflective of the wider London market. Abbey Wood has seen more price growth since 2012 than any other station on the route, with average values up 107% over the last decade. It was followed by Forest Gate (101%), Custom House (99%), Manor Park (98%) and Stratford (95%). By contrast, average prices across the capital rose 85% over the same period.

As the opening date drew closer however, the investor wave subsided, giving way to a growing number of first-time buyers who were looking to shorten their own commutes despite often moving further from zone one. Today more than 60% of purchases around Elizabeth Lines stations are made by people buying their first home, a number which we expect to remain well above average for at least the rest of the year.

For those looking to buy along the route today, the opportunities (aside from a fast commute) typically fall into two main camps. Firstly they’re likely to continue seeing house price growth over and above the London average due to the longer-term regenerative impact of the Elizabeth Line. Typically this will be in lower value places outside zone one which aren’t currently particularly well connected.

Places like Hayes, West Ealing, Woolwich, Abbey Wood and Ilford are all neighbourhoods which will continue to see significant investment even after the Crossrail cranes have left. They all have large developments which offer the potential to change the face and reputation of an area. But change doesn’t happen overnight and someone looking to take advantage of the prospects for price growth, will need to take a five-or ten-year view - just like those who bought into Crossrail after its initial announcement.

Secondly, tenants have so far proved reluctant to pay a premium for living near the Elizabeth Line given the links haven't been open. But this is poised to change, meaning we are likely to see increasingly strong rental growth in Outer London locations as tenants across the capital choose to reshape their commutes. Many will be moving out of more central areas and enjoying lower rents alongside shorter journey times thanks to the new links.

Exploring Crossrail's Rental Market

Most landlords bought into the Crossrail project on the promise of both price growth and higher rents. While for the most part, they have already seen the capital growth, over the coming months they will also begin to see higher rents too. This growth will push up yields which have so far been artificially deflated by investors having paid a premium to buy a home without yet receiving a premium rent.

The flats built because of the Elizabeth Line will provide thousands of homes for London's next generation. While Crossrail may be close to completion, it's only just starting to shape the city.