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Olympic effect opens buy-to-let opportunity

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London has been at the forefront of house price growth over the last years, consistently ranking above all other UK regions but due to the Olympic development in the East End, a new buy-to-let hotspot is emerging. And what's more, it's cheap.

Historically, house prices have risen considerably above the country average in the city that hosts the Olympic Games.

Five years after Barcelona received the event in 1992, prices were 131 per cent more than before, compared to 83 per cent across Spain while homes in Athens were increasing in value at nine per cent greater than the national average in the same time period after the Greek capital learned it had the same honour.

And it appears that the same trend is already underway under two years after having received the games in London. Across the capital as a while, house prices have increased by 15 per cent since the second quarter of 2004.

But new research from Halifax reveals that property price inflation in three postcodes close to the Olympic site is running considerably above this figure.

Leytonstone is the frontrunner at present, having seen the prices of its homes spiral upwards by 23 per cent since the middle of 2004, equating to gains worth £50,714 for local homeowners.

Meanwhile, Hackney and Clapton have also seen above average increases in value even by London's high standards, with jumps of 21 per cent and 18 per cent respectively.

Although the average home in Greater London is £287,176, 54 per cent higher than the UK average, prices in the property hotspot of the East End cost a fraction of this amount; opening up a clear opportunity for the savvy buy-to-let investor.

Homes in the least expensive postal districts near the Olympic site – Paistow, East Ham and Leyton – range between £196,263 and £210,599 while the most pricey – Leytonstone, Hackney and Clapton – are still at least £10,000 below the London average.

Commenting on the research, Tim Crawford, Halifax Estate Agents' group economist, said: "London's winning Olympic bid has boosted regeneration spending in the East End and this has had a positive effect on local house prices. There has been an increase in interest from first time buyers and investors alike.

"Despite recent rises, there are eight postal districts close to the games site where house price are more than 25 per cent below the London average, which highlights the area's still relatively affordable property prices."

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