Analysts, commentators and pundits are in hot debate about whether or not the Olympics is having a positive impact on London property prices and/or the rental market, and whether it will have any effects down the line.
The debate pits two of the most prolific experts on the London property market on opposite sides. Savills' director of residential research Yolande Barnes and Knight Frank's opposite number Liam Bailey are usually pretty close in their predictions and commentaries on the capital (admittedly they mostly comment on prime central London), but they blatantly disagree on whether the Olympics can cause a boom in the east London property market.
Looking at Land Registry data we can see that the anticipated and predicted boom in house prices hasn't materialised. According to the data house prices rose 5.1% in London in the year to end April 2012, but in the borough of Newham home to the Olympic Park, prices moved up just 2% during the same period.
Bailey agrees there has been no boom. "If you look at data from the Land Registry, prices have not boomed in any way — they have followed the regional pattern really," he says. But more importantly he says there will be no boom, not even in the rental market.
We have reports from sites like Homelet talking about the "Olympic Impact" as London rental prices grew by 7.1% in the year ending April, and by 8.6% in east London (an area which includes and extends beyond Newham). Bailey blatantly disagrees with this: "The Olympics doesn't really have any impact in terms of demand, the infrastructure is the main legacy," he says, instead citing London's growing population and the fact that housing in the east is more affordable to the growing thousands in need of houses to rent.
Meanwhile Barnes agrees that there has been no boom, but argues that it is only a matter of time as most of the new housing developments are yet to be completed. Until those developments conclude, it's too soon to look for an Olympic housing boom, said Barnes.
"You absolutely wouldn't expect to have seen one yet," Barnes said. "If you look at this as a regeneration project, regeneration projects only make a difference when they are finished not before they have taken place."
Barnes does expect to see an improvement in house prices and rental rates in the months following the Games, once the Olympic Park and Athletes village become open to the public. However, the improvement will likely be steady owing to the type of housing that will become available.
"There are prospects for rental growth in the longer term as it's where more ordinary Londoners are going to live. [Buyers] will increasingly be investors looking for high quality income streams," Barnes said.
There is even doubt over the heavily anticipated boom in high yield short term rentals. We have sites like HomeAway.co.uk reporting landlords fetching short term lets at rents 70% to 200% above the norm, but others calling such reports hype and saying that such things will not happen often because of the thousands of properties on the market.
"There have been reports of astronomical rents and it's a lot of hype," says Joanne Doniger who runs AccommodateLondon.com. "I know that most companies with people working at the Olympics do not have great big budgets for luxury mansions and anyway, it's up to the guest because there is such a huge selection - it's a buyers' market."
Gumtree, which is a huge UK based classifieds site says that 2,321 ads posted for Olympic rentals between January and May and almost 10,500 replies to such posts. Based on that it would seem that demand is outstripping supply. However, looking at Gumtree now we can see that there are still thousands of properties remaining, which potentially means that renters have unrealistic expectations on what people are willing to pay.
Michael Banks, a director of London based lettings site Upad.co.uk also weighs in on the rental argument, saying any increase in rental rates will only be short-term, and is likely to affect other London boroughs as much as the eastern ones, as people from outside the city will seek to position themselves amidst other attractions offered by the capital. His statements on the potential for a boom in general though are particularly astute.
"There could be some long-term impact on the rental market in east London based on the investment in infrastructure, like the Westfield [Shopping] Centre, but it has nothing to do with 'brand Olympics'," Banks said. "If you look at other sporting stadia in London, like Wembley, the stadium does not increase the value in an area, it depresses it .... no one will pay extra to live there because the Olympics was there three years ago."
- Friday 29 June 2012