Estate agents anticipate considerable falls in property values, in many areas, due to Heathrow 3rd runway
There is already speculation about how much house prices will fall in areas affected by aircraft noise, if there was a Heathrow 3rd runway. The founder of eMoov believes that property prices will be as much as 20% lower in areas such as affected parts of Hounslow, Kew, Windsor and Maidenhead, due to air pollution as well as noise. Another property business, dealing in buy-to-let mortgages, expects that flats and smaller houses will fare better as workers move to the area for work. “Any expansion of Heathrow would be good news for landlords who run their business in close proximity to the airport.” But he expected that having a plane overhead every few minutes would not help increase the price of mansions. The cut in price due to the 3rd runway could even create a pocket of almost affordable housing, if the average house price in Hounslow and Hillingdon fell to around £330,000, from around £407,000 now. Areas nearer the centre of London will also be affected, including Richmond, Westminster, and Hammersmith and Fulham, as the arrival flight paths would go straight over huge areas of west London. The effect on the economy? But one west London estate agent cautioned home owners being too concerned yet, or acting too fast, as the runway cannot be approved for at several years.
Third Heathrow runway will hit surrounding house prices
By Ryan Bembridge (Mortgage Introducer)
October 25, 2016
The third Heathrow runway will blight property prices in the surrounding areas of Hounslow, Kew, Windsor and Maidenhead, eMoov founder Russell Quirk has warned.
The government gave a third runway the green light today six years after the Conservative-led coalition scrapped similar plans.
The move has prompted former London mayoral candidate Zac Goldsmith to resign as an MP, while the current London mayor Sadiq Khan called it the wrong decision for both the capital and the UK.
Quirk called the decision “lhttp://www.mortgageintroducer.com/third-heathrow-runway-will-hit-surrounding-house-prices/#.WBeFEeGLRmCong overdue” and felt it would benefit the UK economy as a whole, though he doesn’t think those living nearby should be jumping for joy.
He said: “Not such great news for the hundreds of residents that will see their properties demolished as a result of the expansion of a third runway.
“Probably even worse news for homeowners in Hounslow, Kew, Windsor, Maidenhead and other surrounding areas who are likely to see the value of their property blighted, as a result of a lengthy construction process and ongoing noise and air pollution.”
But Lee Grandin, owner of buy-to-let brokerage Landlord Mortgages and B2B platform Lend2Landlord, reckoned flats and smaller houses will fare better as workers move to the area.
He said: “Yes, if you have a nice £3m mansion in Kew or Windsor an Airbus over your head every 10 seconds probably isn’t going to make your dream mansion desirable to purchasers.
“But flats and smaller houses will see a significant increase in demand from workers moving to the area for work.
“Any expansion of Heathrow would be good news for landlords who run their business in close proximity to the airport.”
Grandin was bemused by the move after talk of a ‘hard Brexit’ appeared to signal a tightening up on migration.
He added: “Developing infrastructure to support global trade after Brexit will help to strengthen our economy but it doesn’t stack up.
“On the one hand we want to restrict migrant movement from Europe but we are quite happy to encourage their flights to land here to and from Europe.
“Are we replacing immigration with a pollution dump over the capital?”
This is how the third runway at Heathrow will hit London house prices
25.10.2016 (City AM)
By Helen Cahill (who reports on retail and property)
Tens of thousands of pounds could be lost off the price of some houses.
The government has given the go-ahead for the third runway, and if there’s one group of people who won’t be happy about it, it’s the people living nearby.
Estate agents eMoov think the decision could lead to a 20% drop in house prices in the area due the noise and air pollution that the project will bring.
The runway decision could create London’s first affordable pocket for housing – the average house price in Hounslow and Hillingdon could fall to around £330,000, eMoov said. At the moment, the average house price in Hounslow is £407,666.
Areas nearer the centre of the capital will also be affected, including Richmond, Westminster, and Hammersmith and Fulham.
The decision could be the “final nail in the coffin” for house prices in Westminster, eMoov said, where prices have fallen by £65,000 in the last month.
Russell Quirk, founder and chief executive of eMoov, said: “Great news for the UK economy and indeed those that frequently fly out of London for both business and pleasure.
“Not such great news for the hundreds of residents that will see their properties demolished as a result of the expansion of a third runway.”
Ben Madden, managing director of west London estate agents Thorgills said:
Potential buyers will be forensically poring over flight paths to see if that once quiet street will be blighted by aircraft noise.
Aircraft noise in West London is already the property currency. A two-bed house in an area that’s overflown will have a negative value difference of up to 10% to a similar property in an area nearby. A third runway could wipe tens of thousands of pounds off prices.
Some 783 homes will be demolished to make room for the runway, removing communities in Longford and Harmondsworth.
The government said today that it will be giving homeowners faced will compulsory purchase 125 per cent of the market value of their properties, plus stamp duty and other fees.
Rob Weaver, director of investments at Property Partner, said: “The creation of construction jobs in the short-term, airport jobs in the long-term – and all the nearby secondary industries (such as hotels), will push up employment and property prices. I personally live near the area, and my house is under one of the flight paths, but I still believe that there will be far more winners than losers.”
Mark Hayward, managing director of the National Association of Estate Agents, said worried homeowners shouldn’t act too quickly.
“Alongside today’s announcement, the government has also released details of a fresh consultation, while the threat of judicial review still remains high,” Hayward said. “This means homeowners that will be impacted by the extra runway should not rush into making knee-jerk decisions, as they have time to assess their options.”
Sam Bowman, executive director of the Adam Smith Institute, said “we shouldn’t feel too sorry for local residents”.
Their house prices will have been lower to reflect the inconvenience of living in the flight path, compared to similar houses in quieter areas and, for anyone who has bought a house in the past four decades, also to reflect the probability of a third runway being built.
So the trade-off for them is cheaper housing in exchange for a bit more ambient noise from aircraft. [The man is presumably under-informed on the matter. He seems to be unaware that Cameron promised on new runway in 2009. Heathrow promised no new runway in 1999 at the Terminal 5 Inquiry. AW note]
What is the impact on the economy of falling house prices?
How does a fall in house prices affect the economy?
- When there is a fall in house prices, there tends to be a negative wealth effect, and a negative impact on economic growth.
- Because households see a fall in house prices, their main form of wealth declines, this reduces their confidence to spend. They are more likely to devote a higher % of their income to trying to pay off their mortgage early.
- Falling house prices causes more people to be trapped in negative equity (a situation where your house is worth less than outstanding mortgage). This causes a fall in spending, and precludes any opportunity for equity withdrawal.
- Falling house prices has a negative impact on the construction of new houses.
After the 1990 house price crash, there was a sharp fall in consumer spending and this was a major cause of the recession of 1991-92. Falling house prices wasn’t the only factor harming the economy (the economy also suffered from high interest rates and high value of Sterling) But, falling house prices was definitely an important contributing factor.
Falling house prices have an important psychological impact. A fall in house prices can definitely pop a bubble of rising expectations.
The wealth effect looks at the impact of rising value of assets on consumer spending.
A rise in house prices creates an increase in wealth for householders. As a consequence of this increase in house prices, householders will generally:
- Be more confident about spending and borrowing on credit cards. They can always sell their house in an emergency.
- Increase in equity withdrawal. A rise in house prices enables homeowners to take out a bigger mortgage. Banks can lend more on the basis of increased price of the house. Households could use this bigger loan to spend on other items. This can create a significant increase in consumer spending. For example, in 2006, with rising house prices, equity withdrawal added an extra £14bn to consumer spending. In 2008, with falling house prices, equity withdrawal was -£7bn. (people taking opportunity to pay off mortgage)
…. and there is more at