Six years ago, when we bought our bijou little home in South Croydon with a 120 per cent mortgage from Northern Rock, we were told earnestly by the selling estate agent that the opening of the East London Line extension from West Croydon through to Canary Wharf and beyond would easily see £10,000 added to the value of our house.
[Regular reader please note: only part of the preceding sentence is in any way exaggerated]
That was also before Seb and his gym club mates managed to persuade the Lords of the Rings to let London have the privilege of paying billions to stage the 2012 Olympics on a couple of old bomb sites and some industrially poisoned land tucked between an overgrown canal and the Hackney Marshes.
Well, the extension opened at the end of last month, and already the Evening Standard is talking up property prices along the line’s “corridor” through south London.
Let’s not beat about the bush: weasly little articles such as this usually have more to do with the newspaper’s advertisers – the Standard has a lucrative weekly property section, dependent on ads placed by estate agents who have borne the brunt of two years of economic downturn – than with serving the needs of its readership. Objective journalism? Pah!
Last Tuesday’s column, written by someone called Sri Carmichael, appeared less than 10 days from the opening of the extension. Yet it claimed that the new line had already “boosted property prices and demand for homes in previously isolated areas of south-east London”.
“Isolated“? Alright, it might sometimes be tricky to get a cab to go “sarf of the river” when you’ve missed the last train out of London Bridge following a curry and a skin-full after work on a Friday night, but it is not as if Sanderstead is as difficult to get to as Ulan Bator, now is it?
Indeed, I have never failed to be impressed by the ability, thanks to overground services out of East Croydon and then use of the Jubilee Line from London Bridge, to travel in speed and relative comfort to reach either Wembley Stadium or Stratford, door-to-door, in about an hour.
What the £1 billion ELL extension does offer is 12 trains an hour, without the need to change trains en route, thereby significantly improving the capacity along a very busy commuter route.
It is something of a no-brainer to anticipate that such improved infrastructure will impact nearby house prices, just as proximity to a Tube station or high-demand secondary school.
According to Carmichael’s report, “young professionals and City workers looking for quick transport links into central London are suddenly booking viewings” with estate agents, one of whom is claiming, “Prices are back to levels seen at the end of 2007.” Ah… let’s party like it’s 1999, eh?
The Standard then offers one example of one house sale by one estate agent where the price for a two-bed garden flat, half-a-mile from a station on the ELL route, is £20,000 more than 18 months ago, an increase of about 9 per cent.
Hmmm. It all smacks of “talking up the market” to me.
The fundamentals of the housing market in London and the south-east have barely changed since those heady days of 2007: demand for homes in this city still outstrip supply, especially where three-and-more-bedroomed family houses are concerned. That, of itself, has seen property prices in Croydon stable and even begin to rise, despite the worst economic recession in 70+ years.
What is different now is the lack of cash in the system, thanks to the failures of the likes of Northern Rock and other banks. Bailed out with taxpayers’ dough, only when these institutions start to lend money to prospective house buyers will much really start to move.
To that end, the move by the new Business Minister, Vince Cable, to use “mandatory action” to force the semi-nationalised banks to lend on more favourable terms to small and medium-sized businesses, will be widely welcomed.
All that said, when our next door neighbour, property developer Mr F, dropped by earlier this week, he was far from optimistic (and yes, this is entirely anecdotal, and just a single source. But I trust Mr F’s opinion somewhat more than Ms Carmichael’s journalism).
Mr F owns several houses and flats around the borough, as well as some commercial properties, a couple of which are standing empty at present. He’d like to sell, if he could, as the empty properties are only costing him money, not making any for him.
“But no one’s buying,” he said. “People only want to sell.”
As someone who has been in the property business in the Croydon area for decades, Mr F has minimal, if any borrowings, having funded past purchases from equity and profits. This is not the case, says he, for some of those property speculators who tried to jump on the gravy train when prices were booming.
“They’ve gone to the absolute limit, some of them borrowing more than they should,” he said. “Interest rates are rock-bottom right now, but they will get really squeezed if rates go up in the autumn.”
Over to you, Vince…