Down in the Tube station after midnight

In the two years since its arrival in 2016 the 24-hour weekend service on parts of London’s Tube network has had a striking effect on the capital’s property market. Cast your mind back just a few years. You’re on the other side of town, meeting friends or going to a gig. You’d like to get another drink in, but it’s half 11, and it’s either leave now and get the last Tube, or trudge across London on two separate night buses. We’ve all probably done the latter, missing the Tube, slightly on purpose in the heat of the moment, but then probably regretted it a couple of hours later. Let’s be honest though, nine times out of 10, we’d probably have gone with the former. How times change. In 2018, it feels very different. With the advent of the 24-hour Tube, not to mention the availability and cost of Uber, going out on a Friday or Saturday night doesn’t mean calling a night early, due to logistical issues. London is very much a global city, but yet its night-time economy seems to be way behind the likes of New York and Berlin. A few areas, such as Soho, could argue to have had 24-hour economies for quite some time, but others, such as Brixton, until a few years ago would have catered very much for local audiences into the early hours. Today, however, it can cater for night owls from much further afield, with the promise of being able to get home OK. TfL figures released in August 2018, to coincide with and mark the second anniversary of the night Tube illustrate the effect the 24-hour weekend service has had on London’s economy. The report by EY, commissioned by TfL, reveals £190m was added over the past year and around 3,900 extra jobs supported. Over the next 10 years, EY estimates the night Tube will contribute £1.54bn to the wider London economy, double the initial projections made before the service launched in August 2016. Around 17m journeys have been made in the 24 months since it came into operation. There are also plans to expand the night Tube on parts of the Circle, District, Hammersmith & City and Metropolitan line in 2023. So, has all of this translated into further investment, in terms of housing supply and demand, for both new and old? How much is down to market dynamics and the fact the night Tube is now operational is a huge unknown, although the vast majority will be down to the former. Housing supply Land Registry data reveals around 26,700 new-build properties were built during the four years from 2014 and 2017, within 1km of a station on the night Tube. Concurrently, in total, nearly 140,000 homes changed hands in the same time, both new and old. The new-build market peaked around Q4 2016, before falling back slightly in 2017, while the second-hand market peaked in Q1 2016, again falling back. Encouragingly for developers and investors however, the new-build market close to Tube stations with a 24-hour service at weekends has grown to make up a greater share of the market. Just 12% of all transactions across 2014 were for the new-build market, compared with 24% in 2017. Have outer areas not only benefited from cheaper property to entice Londoners from inner London, but also the opening of the night Tube, and the promise of weekend fun in central London and an easy ride home? Quite possibly. Wider London market To reveal even more however, we need to look beyond these figures in isolation, and compare with the wider London market. Again, Land Registry data reveals night Tube locations are picking up a greater share of the market. While transactions across all 33 London boroughs have fallen by around 23% from 2014 to 2017, those close to night Tube stations have held up far better. In doing so, those areas accounted for around 35% of the market in 2017, up from 29% three years earlier. Affordable areas It could be argued the night Tube has arrived at the right time for those developers who are looking to more affordable areas to build homes, where the market has held up, and where both renters and buyers can get better value for money. As central London has overheated in value and the overseas market has turned sour, outer London, where ordinary Londoners can buy on more ordinary wages, has remained resilient. As EG’s Radius Data Exchange shows, nearly 40% of all planning consents in 2014 were for Zones 1 and 2. Across both 2016 and 2017 however, that figure was closer to just 26%. Popular areas for development Areas that have seen the most development close to Tube stations include Canary Wharf, Stratford and Vauxhall. Pimlico, however, comes out on top, with the anomaly that it also includes much of Nine Elms and Battersea, although it is really very much in the realm of Vauxhall’s remit. Prices tumble In terms of house prices, some areas have seen huge falls between 2014 and 2017, reflecting the wider market. As expected, locations such as Victoria, Hyde Park Corner, Knightsbridge and South Kensington suffered. Other areas such as Totteridge and Whetstone, Golders Green and Finsbury Park also come out badly with price falls, somewhat more surprisingly. East London winners Of the 154 stations across the six London Underground lines, just the 10 stations above saw prices fall between 2014 and 2017. The other 144 stations all saw prices rise, according to Land Registry data. Chancery Lane saw a huge rise in 2017, this was down to a large number of sales at Berkeley’s 190 Strand scheme. Other locations that saw prices rise substantially include Whitechapel, Stratford and Leyton, all in east London, again mirroring the wider market. A version of this article appears in the October 2018 print edition of the EG London Investor Guide with the headline “Going Underground”