How the Olympic Games transform local property markets

Posted on: 13th August 2024 in Mortgage & Property

The closing ceremony at the Stade de France brought the curtain down on the 2024 Olympics. While the Games may be over, their impact on the host city’s property market can be felt long after.

Read on to learn how the Olympics have propelled property prices right to the top of the podium.

What drives property value?

Before we look at the relationship between the Olympics and property value, we first need to consider what drives value.

Several factors can affect real estate values. However, one of the biggest is large-scale development projects. These projects often focus on improving infrastructure and transport links and help stimulate the local economy.

Simply put, they make an area more desirable for people to live in and attract businesses. This typically drives demand and, ultimately, boosts property values.

In fact, the correlation between regeneration projects and property value is measurable.

Manchester has undergone major redevelopment in recent years. The city is now home to some of the world’s biggest companies, and around 80 FTSE 100 companies have offices there.

The result? A strong demand for high-quality housing and a boost to property values.

This is reflected in Land Registry data, which shows property prices in Manchester have outpaced England over the last five years. Between 2019 and 2024, house prices increased by 27% in Manchester and 21% across England.

With that in mind, let’s look at how the Olympics influences property value.

The “Olympic Effect”

The UK government spent just shy of £9 billion to host the London 2012 Olympics. That included massive investments in regeneration, infrastructure, facilities and transport, to name a few.

By 2014, official data revealed the UK economy had grown by £14 billion in two years, beating the target of £11 billion in four years.

This is often referred to as the ‘Olympic Effect’. This is a term used to describe the increase in trade and boost to the economy as a result of hosting the Games.

But the Olympic Effect doesn’t just increase global trade. It affects every part of the economy, including property values. Remember, large-scale projects can greatly impact property prices, and few projects are bigger than getting a city ready to host the Olympics.

And if you thought the effects on real estate values were short-lived, you would be wrong.

The lasting effect on property prices

Multiple data sources confirm that the Olympic Effect continues to have a positive impact on property prices long after the Games have ended. For real estate investors, this could mean a long-term boost to their investment.

Analysis from PRD found that median house price growth continued after the 2000 Sydney Olympics. The Australian real estate firm found median prices grew by 38.5% two years after the event and reached 66.4% after three years.

It’s a similar story when we look at the Games that followed, according to Ikory.

The real estate advisory company found that since 2004, the price per square meter has increased by an average of 17% in host cities after the Olympics.

If we look at longer-term performance, property in London takes the gold medal.

Research shows that in 2022, 10 years after London hosted the 2012 Games, Olympic boroughs and postal districts led the way in house price growth. Not only did they surpass other areas across the capital, but they also dwarfed the rest of the country.

According to Lloyds Banking Group, Waltham Forest saw the biggest jump in house price growth between 2012 and 2022. Average house prices rose from nearly £242,000 to just over £537,277 — an increase of 122%.

Newham and Hackney took second and third place; both boroughs saw average property prices jump 98%.

In context, average house prices for London as a whole grew 61% over the same period. Meanwhile, property across England and Wales increased by just under 47%.

So, as a property investor, what should you take from this?

What does this mean for property investors?

The Olympic Games undeniably transform local property markets to varying degrees.

However, the extent of their impact is hard to quantify. Several factors can influence property values, such as mortgage affordability.

What we can be more certain of is the performance of property as an asset, at least from a capital appreciation perspective.

Despite some dips, real estate has historically proven its resilience. The average house price in the United Kingdom has only increased over the last 50 years.

This resilience should reassure property investors, giving them confidence in their investments’ stability and potential growth.

While host cities such as London have shown strong growth following the Olympics, the barrier to entry is often higher.

According to the UK House Price Index, the average house price in London is £523,000, while the UK average is £285,000. That is why many investors are turning their attention to other areas outside of the capital.

Cities across the UK—especially those in the Midlands and North of England—have seen strong growth in recent years. Still, average prices typically remain below the UK average.

In Nottingham, property values have increased by 25% over the last four years, and the city offers strong rental yields, which is a winning combination for investors.

Want a hassle-free way to invest in property? Speak to one of our specialists.

We offer clients a range of exclusive UK and international off-plan and completed properties. Holborn also provides a fully managed service. So, from the starting gun to the finish line, you can be sure that our team are right there with you.

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