The mortgage lender found that property prices along the tram routes in Manchester, Birmingham and Edinburgh grew by an average of 12% in the first two years after opening. This contrasts with the two years before construction when property values remained unchanged in those same cities.
The tram effect
Half of residential locations close to tram stops in Manchester, Birmingham, Nottingham, London and Edinburgh have seen house prices grow faster than surrounding areas.
In Manchester, the residential area served by the South Manchester line has seen house prices grow by 343% (from £57,425 to £254,224) since 1995 compared to an increase of 276% (from £44,488 to £167,431) in the city as a whole.
In Nottingham (pictured), house prices in the area covered by Line 2 in the south of the city have grown by 40% (from £115,050 to £160,674) compared to 31% (from £137,804 to £180,102) in the surrounding areas since 2004.
Andrew Mason, Lloyds Bank mortgage products director, explained the reasons for the price rises: “A new and modern transport system is potentially a great catalyst to urban regeneration and can be a game changer for cities investing in improved links. An excellent tram system can stimulate inward investment for the local economy, unlock previously hard to reach sites for development and make it easier for people to move around the city.
“These are important factors for the housing market, and we can see these routes have helped boost increases in property values. Many properties close to tram links have recorded an outperformance in house price growth compared to the city as whole. Having a tram stop on your doorstep can make a lot of difference.”
Impact of Crossrail
The report also looked at the impact of future transport regeneration – Crossrail. The new service – named the Elizabeth Line – will begin operating this month, although the full service stretching from Reading, in Berkshire, to Shenfield, in Essex, won’t be operational until December 2019.
Despite this, house prices near future Crossrail stations have already seen an average increase of 22% over the past two years in anticipation of the new line, from £344,242 in 2014 to £420,798 in 2016, compared to an average 14% growth for surrounding local authority areas and a 13% rise for Greater London.