Tuesday, December 23, 2014
A study of London postcodes by Countrywide plc, the UK’s largest integrated property services group, reveals that having a London postcode really matters to homebuyers in the Capital.
A home with a London postcode which boarders a non-London postcode area costs an average of £52,000 more. This gap in value presents an opportunity for first time buyers who are willing to compromise on postcode to get onto the housing ladder, and for upsizers looking to trade in a flat for a house.
In 1965, London’s boundary was re-drawn to include large parts of Surrey (now Croydon), Middlesex (now Hillingdon) and Essex (now Redbridge), although these areas retained their original non-London postcode. Countrywide plc compared average £/ft² values in neighbouring postcodes across Greater London to investigate whether there was a premium for traditional London postcodes.
Despite the Capital’s boundaries being redrawn nearly half a century ago, homebuyers are still showing a willingness to pay more for a London postcode – an average premium of 15%. The widest value gaps are predominantly found in West London, where homebuyers are willing to pay a considerable premium for a coveted West London postcode over a neighbouring Middlesex equivalent.
The largest price differences exist where postcode districts follow boundaries which form a physical divide between distinct areas of the Capital. The River Brent provides a distinct divide between Hanwell (W7) and more affordable Southall (UB2). Prices in Southall are 36% lower than in Hanwell despite being under four minutes away on the train. Similarly, Ealing Golf Club presides over a 44% gap in value between Ealing (W5) and Greenford (UB6).
Conversely, price differences are at their smallest where London postcode districts extend furthest out of London, towards the commuter belt. Prices in leafy Essex and Hertfordshire commuter belt postcodes trade at a premium to neighbouring or nearby north eastern and western London postcodes. Prices in Loughton (IG10) are 5% above neighbouring Chingford (E4).
While there are other factors at play, such as differences in transport links, amenities, services and housing stock, the gap in value between neighbouring London and non-London postcodes shows homebuyers are willing to pay more to live in a London postcode.
Commenting on the findings, Paul Creffield, Managing Director of London & Premier, Countrywide plc, said:
“Despite a third of households living in the Capital not having a London postcode, many homebuyers still don’t consider areas which became part of Greater London in 1965, truly part of the Capital. Postcodes, which tend to follow physical boundaries rather than London Boroughs, are the underlying drivers of buyers purchasing decisions. While the parts of Ealing (UB), Croydon (CR) and Harrow (HA) with non-London postcodes sit on the fringes of Inner London, they remain considerably cheaper than their counterparts down the road with a London postcode.
“While homebuyers are still willing to pay a hefty premium for a coveted London postcode, as the Capital continues to grow and new transport links improve connections into the city, a pre-1965 London postcode will perhaps become less of a consideration. Areas without a London postcode but with good links into Central London will increasingly look like good value for money.”
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