What your local high street says about house prices: The shops that add value to your home - and those that detract from it
06-18-2016
• The Waitrose effect adds 8% to local house prices but M&S can add 9%
• Study looked at 27 towns in Hertfordshire and compared prices and shops
• A branch of McDonalds takes 24% off local house prices, it claimed
By Max Davidson for the Daily Mail
Supermarket sweep: A Waitrose nearby adds an average 8 oer cent to the value of homes, claims a new report by Savoy Stewart
Estate agents and househunters alike are so familiar with the Waitrose effect that it has become one of the big cliches in the world of property.
‘You can’t go wrong if you buy near a Waitrose.’ Someone, somewhere, is thinking that right now as they dither over a house purchase.
A Lloyds Bank report last year suggested that proximity to a Waitrose added a thumping 12 per cent, or an average of £40,000, to the value of a property.
Starbucks used to be invested with the same magical aura.
Good brands equalled good areas.
But how about the shops/retailers at the other end of the scale? Businesses that depress prices rather than inflate them?
Some interesting new research by commercial property agents Savoy Stewart, in conjunction with journalistic.org, has put the spotlight on some well-known brands which are not exactly a hit with homeowners.
By taking 27 towns in Hertfordshire, then matching the retail outlets in those towns against the average property price, the study finds a clear correlation between towns with downmarket or ‘value’ brands and towns with below-average property prices for the county.
If you live near a McDonald’s, for example, you are quids in when it comes to buying cheap meals for the family, but quids out when it comes to living in a sought-after residential area.
The Waitrose effect in this survey adds 8 per cent — that is the percentage by which house prices in a town with a Waitrose exceed the local average.
The M&S effect equates to 9 per cent. The strongest brand of all is Zaza, the posh Italian restaurant chain, which, it is claimed, adds an astonishing 42 per cent. Just follow the smell of funghi al gorgonzola and you will find yourself in a property hot spot.
But the McDonald’s effect, by contrast, subtracts 24 per cent. Perhaps it is the lingering whiff of Big Macs that puts off househunters.
A McDonalds is not good news. A branch of the fast food chains pushes nearby house prices down by 24%, Savoy Stewart claim and Assa and Primark signal lower value areas too
Or just those lurid yellow signs. There are a hundred subtle snobberies at work here. Primark (minus 23 per cent), Asda (minus 22 per cent) and Poundland (minus 16 per cent) — the usual suspects, you might say — have a similarly negative effect on house prices.
Great for shoppers on a budget. Not so great for homeowners who want to live in areas that are on the up — and, just as importantly, seen to be on the up.
Perception is everything in property.
And nothing does more to shape perceptions of towns than the shop brands which we all recognise, with their signs. ‘The findings were not a surprise to me,’ says Darren Best, managing director of Savoy Stewart.
‘Previous studies have highlighted the Waitrose effect, but this one indicates an overall High Street brand effect which extends well beyond Waitrose and encompasses both luxury and value brands.’
Estate agents who know their stuff not only understand that Waitrose trumps Asda and why the distinction matters, but also keep an eye out for new stores.
‘The opening of a new Waitrose or John Lewis does not lead directly to an increase in house prices, but it does make an area more desirable, which in the long run can amount to the same thing,’ says Paula Moore, of Strutt & Parker in Horsham.
However, a 2013 study by American Express found that towns whose High Streets had a high proportion of independent shops outperformed towns dominated by chain stores by 17 per cent in terms of property prices.
So if you are running a quick eye over the High Street, the best brand of all, paradoxically, is not Waitrose or Carluccio’s, but rather a well-regarded independent name. Which, in a world dominated by retail giants, is oddly reassuring.