HIGH SPEED 2 BLIGHT STUDY

Transcription

1 HIGH SPEED 2 BLIGHT STUDY December 2010

2 CONTENTS 1. Executive Summary Introduction The impact of the proposed route on property values The impact of the proposed route on sales volumes The impact on urban and rural areas The impact around tunnel portals Conclusion APPENDICES A. Appendix 1 - Methodology B. Appendix 2 The Route C. Appendix 3 - s D. Appendix 4 Analysis Zones E. Appendix 5 - Data F. Appendix 6 Glossary of Terms G. Appendix 7 National and Regional analysis H. Appendix 8 Study Limitations... 50

3 1 Executive Summary

4 Change Period 1 vs Period 2 (%) Change Period 1 vs Period 2 (%) EXECUTIVE SUMMARY Page 4 Executive Summary High Speed 2 Ltd commissioned CB Richard Ellis to examine whether the announcement of the HS2 route in March 2010 impacted on local housing market activity. To this end we compared residential property transaction levels and values in the six months before and after the announcement. We studied areas next to the line (Zone A) and compared these changes with those further away from the line (Zone B). We also considered activity in areas far enough away to be unaffected by way of a control sample (Zone C). 1. Our research found that the housing markets in areas next to the proposed route have weakened since the announcement. Generally we found that in these areas house prices and sales volumes have fallen since the announcement. 2. Further away from the line values and volumes either rose or fell to a lesser extent. The two charts below show price and activity falls in Zone A, which is the analysis area nearest to the route. There were increases further away. 3. Prices and volumes had weakened more in rural areas than urban areas. Values and sales volumes fell in the rural areas, but increased in the more densely populated areas. There is likely to be existing noise blight from other infrastructure in urban areas which has been built into pricing levels. 4. Areas immediately around tunnel portals saw a negative change on prices and volumes where the tunnelled line emerges into an overland section. Conversely we identified a positive change on the other side where the line is underground. Figure 1. Changes in values following the announcement of the proposed route Figure 2. Changes in sales volumes following the announcement of the proposed route 8% 7% 6% 5% 4% 3% 2% 1% (1)% (2)% All areas (excl tunnels) 1 8% 6% 4% 2% (2)% (4)% (6)% All areas (excl tunnels) Zone A Zone B Zone C Zone A Zone B Zone C While this study does not account for other factors affecting housing markets along the route, the consistency of the results point to a relationship between proximity to the route and weaker values and transaction levels following the announcement. It is possible that specific factors like new residential development, investment in other transport infrastructure and the growth of employment centres may have lifted sales volumes and prices, or vice versa. However, it is beyond the scope of this research to look into these. The only exception is urban and rural markets which we considered separately on the request of HS2 Ltd. More detailed and area specific analysis could form the basis of future research. Source for both charts: Land Registry; CB Richard Ellis Research

5 Executive Summary SUMMARY2 EXECUTIVE Page 5 Introduction

6 INTRODUCTION Page 6 Introduction INTRODUCTION Background High Speed Two Limited (HS2 Ltd) was set up by the Government to consider the case for new high speed rail services in the UK. Created in January 2009, it examines the case for rail services linking London, northern England and Scotland. It also specifically considers the feasibility of, and business case for, a new high speed rail line between London and the West Midlands, the subject of this paper. HS2 delivered a report to Ministers at the end of 2009, published in March 2010, alongside the previous Government s Command Paper on high speed rail. In light of HS2 Ltd s new remit of 11 June 2010, the coalition Government asked HS2 Ltd to carry out further work on a Heathrow connection, along with a report on the comparative case for different ways of connecting the West-Midlands, Manchester and Leeds. This work will inform the Government s overall strategy and timetable for establishing a high speed rail network. HS2 Ltd has been asked by the Government to plan a public consultation for early This will represent an opportunity for those with an interest to find out more about the proposals and to put forward their views. In March 2010, it was proposed that the second high speed rail service would run from London Euston, mainly in tunnel, to an interchange with Crossrail, west of Paddington, past West Ruislip alongside the Chiltern Main Line, to Amersham then on to Aylesbury. After Aylsebury, the line would run alongside the Aylesbury to Verney Junction line, joining it north of Quainton road and then broadly following the direction of the dismantled Great Central Main Line. Beyond Brackley, the route strikes out to the north-west across open countryside. See maps 7 and 8 in appendix 4 for more information. With this announcement some home owners discovered the possibility of having their property blighted, with some media commentary suggesting that houses within 500 meters of the track may lose as much as 2 on the asking price. The debate on the effect of HS2 on house prices near the route is ongoing. The purpose of this report and our approach This report provides independent analysis to reveal the facts and examine whether the housing market around the proposed route has been affected since the announcements of the route. To this end we compared residential property transaction levels and values before and after the announcement in areas immediately around the proposed route (Zone A). We compared areas immediately around the route with areas further away (Zones B and C). For more information please see Appendix 1 Methodology. The report is structured: The report first considers changes in values along the whole route of HS2 excluding the two areas where the line runs into a tunnel (see Appendix 3 s). It compares areas close to the line with those further away so we can see if the line has affected prices nearby. It then does the same for sales volumes. Next, we undertake the same analysis, but this time separate areas between urban and rural. The final analysis looks at how areas immediately around the tunnel exits have been affected.

7 Page 7 Introduction INTRODUCTION3 The impact of the proposed route on sales values

8 Change Period 1 vs Period 2 (%) THE IMPACT OF THE PROPOSED ROUTE ON PROPERTY VALUES Page 8 The impact of the proposed route on property values In this section, we examine how property values have changed following the announcement of HS2. We first consider the affect on all property types combined and then disaggregate to the individual property types; flats, detached etc. We compare areas, on the overground section of the route, close to the line Zone A with areas further away - Zone B and C. For more information please see Appendix 1 Methodology. THE IMPACT ON ALL TYPES OF PROPERTY Our first analysis considered the difference between prices prior to and post the route announcement for all properties along the whole route, except where the line runs in a tunnel. We observed prices in Zone A, nearest to the route had fallen by 1.3% compared with a rise of 3.7% in Zone B and a 7.2% rise in Zone C (See Fig. 1). Given that prices have weakened near to the route, but not further away it suggests that HS2 has had a detrimental effect on prices, all other things being equal. Figure 1. Values in Period 1 and Period 2 - All properties (overground) 25% % 1 5% (5)% (10)% (15)% (20)% Average prices Period 1 and Period 2 ( '000) (25)% Zone A Zone B Zone C 0 Period 1 (RHS) Period 2 (RHS) Difference (LHS) Source: Land Registry; CB Richard Ellis Research

9 THE IMPACT OF THE PROPOSED ROUTE ON PROPERTY VALUES Change Period 1 vs Period 2 (%) Page 9 The impact of the proposed route on property values THE IMPACT ON DIFFERENT TYPES OF PROPERTY Flats This analysis considers the difference in prices before and after the announcement just for flats in all areas except tunnels. Prices for flats in Zone A have fallen by 2.2% following the announcement compared with a rise of 10.2% and 6.1% in Zones B and C respectively (see Fig. 2). This means, as with all property types taken together, prices have weakened near to the route but not further away. Unlike the previous analysis the increase has been greater in Zone B than Zone C. We conclude that HS2 has had a detrimental effect on prices of flats, all other things being equal. Figure 2. Values in Period 1 and Period 2 - Flats 25% 2 15% 1 5% (5)% Average prices Period 1 and Period 2 ( ) (10)% 150 (15)% 100 (20)% 50 (25)% Zone A Zone B Zone C 0 Period 1 (RHS) Period 2 (RHS) Difference (LHS) Source: Land Registry; CB Richard Ellis Research

10 THE IMPACT OF THE PROPOSED ROUTE ON PROPERTY VALUES Change Period 1 vs Period 2 (%) Page 10 The impact of the proposed route on property values Terraced Houses This analysis considers the difference in prices before and after the announcement for terraced housing in all areas except tunnels. Terraces have seen their prices rise by 1% in Zone A. However Zones B and C have seen a greater rise, 3.3% and 2.5% respectively (see figure 3). Although prices have not fallen, they have risen by a lesser extent, suggesting a negative impact from HS2 all other things being equal. Figure 3. Values in Period 1 and Period 2 - Terraced (excluding tunnels) 25% 2 15% 1 5% (5)% (10)% Average prices Period 1 and Period 2 ( '000) (15)% 100 (20)% 50 (25)% Zone A Zone B Zone C 0 Period 1 (RHS) Period 2 (RHS) Difference (LHS) Source: Land Registry; CB Richard Ellis Research

11 THE IMPACT OF THE PROPOSED ROUTE ON PROPERTY VALUES Change Period 1 vs Period 2 (%) Page 11 The impact of the proposed route on property values Semi-detached houses The difference in price levels before and after the announcement for semi-detached in all over-ground areas. All prices have risen, but prices in Zone A rose by the least. Prices in Zone A have risen by 1.4%, compared with a rise of 5.4% and 5.9% in Zones B and C respectively (see figure 4). Again the prices of semi-detached properties near HS2 have been negatively impacted all other things being equal. Figure 4. Values in Period 1 and Period 2 Semi-detached (excluding tunnels) 25% 2 15% 1 5% (5)% (10)% Average prices Period 1 and Period 2 ( '000) (15)% 100 (20)% 50 (25)% Zone A Zone B Zone C 0 Period 1 (RHS) Period 2 (RHS) Difference (LHS) Source: Land Registry; CB Richard Ellis Research

12 THE IMPACT OF THE PROPOSED ROUTE ON PROPERTY VALUES Change Period 1 vs Period 2 (%) Page 12 The impact of the proposed route on property values Detached houses The same analysis is undertaken here, but for detached properties. Prices of detached houses in Zone A have fallen by 1.8% compared with a fall of 0.2% in zone B and a 2.3% rise in Zone C (see figure 5). This suggests prices of detached properties have weakened near to the route, but not to the same extent further away. On this basis HS2 has had a detrimental effect on prices, all other things being equal. Figure 5. Values in Period 1 and Period 2 Detached (excluding tunnels) 25% 2 15% 1 5% (5)% (10)% (15)% (20)% Average prices Period 1 and Period 2 ( '000) (25)% Zone A Zone B Zone C 0 Period 1 (RHS) Period 2 (RHS) Difference (LHS) Source: Land Registry; CB Richard Ellis Research

13 THE IMPACT OF THE PROPOSED ROUTE ON PROPERTY VALUES Page 13 The impact of the proposed route on property values 3 The impact of the proposed route on sales volumes

14 Change Period 1 vs Period 2 (%) THE IMPACT OF THE PROPOSED ROUTE ON SALES VOLUMES Page 14 The The impact impact of of the the proposed proposed route route on on sales sales volumes volumes In this section we identify whether property transaction levels have been affected by the announcement of HS2. Again we focus first on the overall market and then disaggregate out to individual property types. THE IMPACT ON ALL TYPES OF PROPERTY This analysis considered the difference in sales volumes before and after the announcement for all properties in all over-ground areas. Volumes in Zone A fell by 4.5% compared with a rise of 8.4% in zone B and 3% in Zone C. The sample behind this percentage change figure is 6,585 sales in Zone A 13,285 in Zone B and 17,161 in Zone C (see figure 6). As sales volumes has weakened near to the route, but not further away, we conclude HS2 has had a detrimental effect on sales volumes, all other things being equal. Figure 6. Sales in Period 1 vs Period 2 - All properties (overground) 25% 2 15% 1 5% 10,000 9,000 8,000 7,000 6,000 5,000 Total sales Period 1 and Period 2 (no.) (5)% 4,000 (10)% 3,000 (15)% 2,000 (20)% 1,000 (25)% Zone A Zone B Zone C 0 Period 1 (RHS) Period 2 (RHS) Difference (LHS) Source: Land Registry; CB Richard Ellis Research

15 THE IMPACT OF THE PROPOSED ROUTE ON SALES VOLUMES Change Period 1 vs Period 2 (%) Page 15 The impact of the proposed route on sales volumes THE IMPACT ON DIFFERENT TYPES OF PROPERTY Flats This analysis considered the difference in sales volumes before and after the announcement for flats in all areas except tunnels. Sales volumes in Zone A have fallen by 25. compared with a fall of 2.1% in zone B and a 0.8% rise in Zone C (see figure 7). These figures are derived from 1,319 sales in Zone A 2,925, in Zone B and in Zone C 3,195. This suggests - very strongly - that sales volumes of flats have suffered in areas close to the HS2 route, all other things being equal. Figure 7. Sales in Period 1 and Period 2 - Flats (excluding tunnels) 25% 2 15% 1 5% 2,500 2,000 1,500 Total sales Period 1 and Period 2 (no.) (5)% 1,000 (10)% (15)% 500 (20)% (25)% Zone A Zone B Zone C Period 1 (RHS) Period 2 (RHS) Difference (LHS) 0 Source: Land Registry; CB Richard Ellis Research

16 Change Period 1 vs Period 2 (%) THE IMPACT OF THE PROPOSED ROUTE ON SALES VOLUMES Page 16 The impact of the proposed route on sales volumes Terraced housing This analysis considered the difference in sales volumes before and after the announcement for terraced houses in all over-ground areas. Sales volumes of terraces in all areas saw volumes fall in Zone A by 5.1%, while volumes in Zone B rose 7.3% and fell by 2.7% in Zone C (see figure 8). These figures are derived from 1581 sales in Zone A 3472, in Zone B and in Zone C Although sales of terraces fell in the area immediately around the HS2 route (Zone A) and rose in Zone B, the results are less conclusive, because sales also fell in Zone C. The weakening in Zone C suggests factors other than HS2 may also be influencing volumes. Figure 8. Sales in Period 1 and Period 2 - Terraced (over-ground) 25% 2 15% 1 5% 2,500 2,000 1,500 Total sales Period 1 and Period 2 (no.) (5)% 1,000 (10)% (15)% 500 (20)% (25)% Zone A Zone B Zone C Period 1 (RHS) Period 2 (RHS) Difference (LHS) 0 Source: Land Registry; CB Richard Ellis Research

17 THE IMPACT OF THE PROPOSED ROUTE ON SALES VOLUMES Change Period 1 vs Period 2 (%) Page 17 The impact of the proposed route on sales volumes Semi-detached houses Sales volumes for semi-detached properties in Zone A rose by 4.2% over the two time periods. This compares with rises of 11.4% and 6.5% for Zones B and C respectively. These figures are derived from 1,973 sales in Zone A 3,926 in Zone B and in Zone C 5,546. Sales of semi-detached houses rose in all zones. However, the rise was less significant nearer to the proposed route, suggesting a degree of adverse impact [from HS2], but does not directly show evidence of blight. Figure 9. Sales in Period 1 and Period 2 Semi-detached (excluding tunnels) 25% 2 15% 1 5% 3,000 2,500 2,000 1,500 Total sales Period 1 and Period 2 (no.) (5)% (10)% 1,000 (15)% 500 (20)% (25)% Zone A Zone B Zone C Period 1 (RHS) Period 2 (RHS) Difference (LHS) 0 Source: Land Registry; CB Richard Ellis Research

18 THE IMPACT OF THE PROPOSED ROUTE ON SALES VOLUMES Change Period 1 vs Period 2 (%) Page 18 The impact of the proposed route on sales volumes Detached houses Volumes of detached houses in all areas excluding tunnels rose by 6.3% in Zone A. This compares with a rise of 17.2% in zone B and a 6.9% rise in Zone C. These figures are derived from 1,712 sales in Zone A 2,962 in Zone B and 3,885 in Zone C. Sales of detached houses rose in all areas. The largest rise was in Zone B, suggesting being close to the route could have negatively impacted on volumes but does not directly show evidence of blight. Figure 10. Sales in Period 1 and Period 2 Detached (excluding tunnels) 25% 2 15% 1 5% 2,500 2,000 1,500 Total sales Period 1 and Period 2 (no.) (5)% 1,000 (10)% (15)% 500 (20)% (25)% Zone A Zone B Zone C 0 Period 1 (RHS) Period 2 (RHS) Difference (LHS) Source: Land Registry; CB Richard Ellis Research

19 THE IMPACT ON URBAN AND RURAL AREAS Page 19 The impact on urban and rural areas

20 THE IMPACT ON URBAN AND RURAL AREAS Page 20 The impact on urban and rural areas 5 The impact on urban and rural areas

21 Change Period 1 vs Period 2 (%) THE IMPACT ON URBAN AND RURAL AREAS Page 21 The impact on urban and rural areas THE IMPACT ON SALES VALUES This next section focuses solely on the areas closest to the proposed route. Here, instead of comparing Zone A with B and C, it compares changes in the housing market between urban and rural areas. As with the previous section, we examine both prices and sales volumes. Please see Map 9 in Appendix 4 for more detail on what areas this analysis considers. In rural areas of Zone A values have fallen 4.9% whereas in urban areas they have risen 2.3% (see figure 11). Our analysis suggests rural areas have been impacted proportionally more than urban areas. Urban areas already suffer noise blight from other transport infrastructure and this has been built into pricing levels; as a result further noise blight is probably less relevant than in rural settlements. Figure 11. Changes in values in rural and urban areas of Zone A - All properties 25% 1, % 1 5% (5)% (10)% (15)% Average prices Period 1 and Period 2 ( '000) (20)% 100 (25)% Rural Urban 0 Period 1 (RHS) Period 2 (RHS) Difference (LHS) Source: Land Registry; CB Richard Ellis Research

22 Change Period 1 vs Period 2 (%) THE IMPACT ON URBAN AND RURAL AREAS Page 22 The impact on urban and rural areas THE IMPACT ON SALES VOLUMES In rural areas sales volumes have fallen 0.7%. In urban areas they have fallen 8%. This suggests that sales in urban areas - other things being equal have been hit hardest by the route announcement. This appears to contradict the previous findings, which suggest prices in rural areas have reduced more. However, it probably suggests potential sellers / buyers in urban areas have been dissuaded from moving, partly due to reduced prices, but also until the route is confirmed or blight compensation confirmed. Figure 12. Changes in sales volumes in rural and urban areas of Zone A - All properties (excluding tunnels) 25% 2, ,800 15% 1 5% (5)% (10)% (15)% 1,600 1,400 1,200 1, Sales volumes Period 1 and Period 2 (no.) (20)% 200 (25)% Rural Urban 0 Period 1 (RHS) Period 2 (RHS) Difference (LHS) Source: Land Registry; CB Richard Ellis Research

23 THE IMPACT AROUND TUNNEL PORTALS Page 23 The impact around tunnel portals

24 THE IMPACT AROUND TUNNEL PORTALS Page 24 The impact around tunnel portals 6 The impact around tunnel portals

25 Change Period 1 vs Period 2 (%) THE IMPACT AROUND TUNNEL PORTALS Page 25 The impact around tunnel portals THE IMPACT ON SALES VALUES In this analysis we study sales values and volumes in areas immediately around areas the tunnel entrances. We compared the areas where the line emerges with areas where the line is underground. We first looked at all four portals together (two for each tunnel) and then each in isolation. For more information on the exact location of these portals, please see Maps 11 and 12 in Appendix 4. The main conclusion is that values have weakened proportionally more where trains would emerge from the tunnel. The closer to the portal, the more the negative impact. In areas around the four portals of s 1 and 2, prices in Zone A fell by 9.2%. This compares with a 2.4% rise in the housing markets that are over the tunnels. In Zone B house prices fell by 2.3% in areas just preceding the tunnel entrance. In comparison prices rose by 19.3% in the properties above the tunnel. Zone C showed almost equal rise in the two samples. The negative effect of the portals on values therefore diminishes with distance (see figure 13). This pattern is repeated when we observe the portals individually (except for the end of 2). Figure 14 looks at the start 1. In Zone A there was a fall of 24.1% in the area at the tunnel entrance compared with a rise of 5 in the overground section of the tunnel. In Zone B we saw a fall of 17.1% at the entrance area compared with a rise of 46.3% over the tunnel area. Zone C showed a rise of 5.9% in the over ground sections compared with a fall of 14% over the tunnel. Figure 15 illustrates changes in values on the proposed line at the end of 1. In Zone A there was a fall of 2.1% between periods 1 and 2 in the over ground sections compared with a rise of 1.9% over the tunnel. In Zone B we saw a rise of 9.3% in the over ground sections compared with a rise of 9.3% over the tunnel. Zone C showed a rise of 6.2% in the over ground sections compared with a rise of 8% over the tunnel. Figure 13. Values in Period 1 vs 2 - All properties All tunnel portals 25% 2 15% 1 5% (5)% (10)% (15)% (20)% (25)% Entrance Over Entrance Over Entrance Over A B C Source: Land Registry; CB Richard Ellis Research

26 Change Period 1 vs Period 2 (%) Change Period 1 vs Period 2 (%) THE IMPACT AROUND TUNNEL PORTALS Page 26 Change Period 1 vs Period 2 (%) Change Period 1 vs Period 2 (%) The impact around tunnel portals Figure 14. Values changes Period 1 vs 2 - All properties Start of 1 Figure 15. Values changes Period 1 vs 2 - All properties End of (0)% (20)% (40)% (60)% Entrance Over Entrance Over Entrance A B C Over (0)% (20)% (40)% (60)% Entrance Over Entrance Over Entrance A B C Over Source for both: Land Registry; CB Richard Ellis Research Figure 16 shows that in Zone A at the start of 2, there was a fall of 10.7% between periods 1 and 2 in the entrance sections compared with a rise of 0.1% over the tunnel. In Zone B we saw a rise of 2.4% in the entrance sections compared with a fall of 2.4% over the tunnel. Zone C showed similar rises regardless of location. Figure 17 shows that in Zone A at the end of 2 there was a rise of 10.9% between periods 1 and 2 in the over ground sections compared with a fall of 19.8% over the tunnel. In Zone B we saw a rise of 3.1% in the over ground sections compared with a fall of 39.5% over the tunnel. Zone C showed a fall of 2.9% in the over ground sections compared with a rise of 2. over the tunnel. Figure 16. Values changes Period 1 vs - All properties Start of 2 Figure 17. Values changes Period 1 vs 2 - All properties End of (0)% (0)% (20)% (20)% (40)% (40)% (60)% Entrance Over Entrance Over Entrance A B C Over (60)% Over Over Over Entrance Entrance Entrance A B C Source for both: Land Registry; CB Richard Ellis Research

27 Change Period 1 vs Period 2 (%) THE IMPACT AROUND TUNNEL PORTALS Page 27 The impact around tunnel portals THE IMPACT ON SALES VOLUMES From this analysis we conclude sales volumes have weakened at the tunnel portals (where trains would emerge). While this relationship is only evident in Zone A close to the portals, it is nonetheless a significant finding. Figure 18 shows that all tunnel portals In Zone A there was a fall of 12.1% between periods 1 and 2 at the tunnel entrance compared with a rise of 21.6% over the tunnel. In contrast, the areas at the tunnel entrance rose in Zones B and C (by 17.7% and 9.2% respectively) compared in the areas adjacent to the tunnels (-7.2% and 0.6%). Figure 19 shows changes in sales on the proposed line at the start 1. In Zone A there was a fall of 5 between periods 1 and 2 at the entrance compared with a rise of over the tunnel. In Zone B we saw a fall of 6.2% in the over ground sections compared with a fall of 20.3% over the tunnel. Zone C showed a fall of 7% in the over ground sections compared with a fall of 12% over the tunnel. Figure 20 shows changes in sales on the proposed line at the end of 1. In Zone A there was a rise of between periods 1 and 2 in the over ground sections compared with a rise of 5.5% over the tunnel. In Zone B we saw a rise of 35.5% in the over ground sections compared with a fall of 3.1% over the tunnel. Zone C showed a fall of 5.5% in the over ground sections compared with a rise of 4.5% over the tunnel. Figure 18. Sales volumes Period 1 vs 2 - All properties All tunnel portals 25% 2 15% 1 5% (5)% (10)% (15)% (20)% (25)% Entrance Over Entrance Over Entrance Over A B C Source: Land Registry; CB Richard Ellis Research

28 Change Period 1 vs Period 2 (%) Change Period 1 vs Period 2 (%) THE IMPACT AROUND TUNNEL PORTALS Page 28 Change Period 1 vs Period 2 (%) Change Period 1 vs Period 2 (%) The impact around tunnel portals Figure 19. Sales volume changes Period 1 vs 2 - All properties Start of 1 Figure 20. Sales volume changes Period 1 vs 2 - All properties End of (0)% (20)% (40)% (60)% Entrance Over Entrance Over Entrance A B C Over (0)% (20)% (40)% (60)% Entrance Over Entrance Over Entrance A B C Over Source: Land Registry; CB Richard Ellis Research Figure 21 shows that at the start 2, in Zone A there was a rise in volumes of 19.7% over ground compared with a fall of 6.8% over the tunnel. In Zone B we saw a rise of 38.5% in the over ground sections compared with a fall of 6.7% over the tunnel. Zone C showed a rise of 18% in the over ground sections compared with a fall of 3.8% over the tunnel. Figure 22 shows changes in sales on the proposed line at the end of 2. In Zone A there was a rise of 2% between periods 1 and 2 in the over ground sections compared with a rise of 22.2% over the tunnel. In Zone B we saw a rise of 8.7% in the over ground sections compared with a rise of 66% over the tunnel. Zone C showed a rise of 11.2% in the over ground sections compared with a rise of 26.8% over the tunnel. Figure 21. Sales volume changes Period 1 vs 2 - All properties Start of 2 Figure 22. Sales volume changes Period 1 vs 2 - All properties End of (0)% (20)% 1 (10)% (30)% (40)% (50)% (60)% Over Over Over Entrance Entrance Entrance A B C (70)% Entrance Over Entrance Over Entrance A B C Over Source: Land Registry; CB Richard Ellis Research

29 Change Period 1 vs Period 2 (%) Change Period 1 vs Period 2 (%) Change Period 1 vs Period 2 (%) Change Period 1 vs Period 2 (%) THE IMPACT AROUND TUNNEL PORTALS Page 29 The impact around tunnel portals VALUES AND VOLUMES ALONG THE TUNNEL ROUTES In the first two sections of this report, we considered changes in values and volumes in overland sections of the report. We also examined the tunnelled sections. However, in tunnelled sections we did not determine any clear relationships between proximity to route and housing market activity. This stands to reason as the housing market should not be affected by the line inside a tunnel, as the surrounding area shouldn t experience noise impacts to the same extent (as if the tunnel over ground). For tunnel 1, prices in Zone A fell by 3.4% whereas in Zones B and C they rose by 17.1% and 10.9% respectively (see Fig. 23). Volumes on the other hand rose in Zone A by 22.4% compared with a rise of 2.4% in zone B and a 1.7% fall in Zone C (see Fig 25). In 2, prices in Zone A fell 0.7% and by 4.1% in Zone B and risen significantly by 26.4% in Zone C (see Fig. 24). Volumes in Zone A rose by 7.5% compared with a fall of 0.4% in zone B and a 2.4% rise in Zone C (see Fig 26). Figure 23. Values in Period 1 and Period 2 - All properties ( 1) Figure 24. Values in Period 1 and Period 2 - All properties ( 2) 25% 2 15% 1 5% (5)% (10)% (15)% (20)% (25)% Zone A(T1) Zone B(T1) Zone C(T1) 1, Average prices Period 1 and Period 2 ( '000) (10)% (20)% (30)% Zone A(T2) Zone B(T2) Zone C(T2) 1, Average prices Period 1 and Period 2 ( '000) Period 1 (RHS) Period 2 (RHS) Difference (LHS) Period 1 (RHS) Period 2 (RHS) Difference (LHS) Source for both: Land Registry; CB Richard Ellis Research Figure 25. Sales in Period 1 and Period 2 - All properties ( 1) Figure 26. Sales in Period 1 and Period 2 - All properties ( 2) 25% 2 15% 1 5% (5)% (10)% (15)% (20)% (25)% Zone A(T1) Zone B(T1) Zone C(T1) 2,500 2,000 1,500 1, Total sales Period 1 and Period 2 (no.) 25% 2 15% 1 5% (5)% (10)% (15)% (20)% (25)% Zone A(T2) Zone B(T2) Zone C(T2) 2,500 2,000 1,500 1, Total sales Period 1 and Period 2 (no.) Period 1 (RHS) Period 2 (RHS) Difference (LHS) Period 1 (RHS) Period 2 (RHS) Difference (LHS) Source for both: Land Registry; CB Richard Ellis Research

30 CONCLUSION Page 30 Conclusion

31 Page 31 Conclusion CONCLUSION7 Conclusion

32 CONCLUSION Page 32 Conclusion The purpose of this report was to observe property values and transactions levels both pre and post the announcement of the proposed route of High Speed 2 between London and Birmingham. Our principal observation was that both sales volumes and values were generally lower after the announcement than before near the proposed route. This was certainly the case when looking at the over-ground route as a whole where sales values fell in Zone A, rose in zone B and rose further in Zone C (see Figure 1). We observed a similar pattern for sales volumes When we considered changes in values for individual property types, we found this pattern was largely repeated, but with some exceptions. These were generally linked to the small sample sizes of certain property types in certain area, in particular detached properties in central London. In addition, we compared the impact in rural areas versus urban areas. We found that while rural areas appeared to be affected, this was not the case for urban areas. Figure 27. Summary of conclusions Price change in Zone A Changes in sales volumes in Zone A Whole overland line 1.3% 4.5% Whole overland line urban areas 2.3% 8. Whole overland line rural areas 4.9% 0.7% portals 9.2% 12.1% Our research also showed that prices and activity were negatively affected at tunnel portals that is where the train would emerge from a tunnel. In contrast there was no such affect over the tunnel or where the train runs underground. However, given the localised areas with just a handful of postcode sectors, the sample sizes were very low, which led to volatile behaviour, so these findings are less reliable. The results for the tunnel areas were inconclusive. This largely reflects historically low levels of transactions, which currently characterise the UK property market and makes accurate analysis difficult. In addition 1 runs through areas of prime central London, which has recovered more quickly from the downturn than areas further out. This area is likely to have a large number of other factors influencing values and transaction levels.

33 APPENDIX 1 - METHODOLOGY Page 33 DO NOT DEL Appendix 1 - Methodology APPENDICES

34 APPENDIX 1 - METHODOLOGY Page 34 Appendix 1 - Methodology The purpose of this report was to study the behaviour of housing markets close to the proposed High Speed 2 rail link between London and Birmingham. In these areas we studied residential property values and transaction levels before and after the announcement of the proposals in March We did this using Land Registry data which provided the number of transactions and the average value of each postcode sector (e.g. B12 5 ) in the UK for four periods (two quarters either side of the announcement of the proposed route. We then used Geographical Information System (GIS) technology to map the route of the proposed line between London and Birmingham. We overlaid postcode sector boundaries on top of the route and removed all areas which were other than three closest postcode sectors to the line. We sub divided the remaining areas according to how close they were to the proposed line. The postcode sectors which the proposed line runs through we called Zone A. We defined Zone B as the next set of postcode sectors away from the line and Zone C as the next set still (see Figure 30 below). This allowed us to see whether or not the market close to the proposed line had been affected differently to areas further away. For more information, see the appendices. For more detailed analysis of the nature of the line, we further defined areas where the line becomes a tunnel (as opposed to being overland). We also defined where the line was running through more and less densely populated areas, with densely populated areas being those with more than 5 dwellings per hectare. From this point the analysis simply compared differences in residential property values and transactions levels before and after the announcement. This was repeated across a;; of the geographical sub divisions described above. Figure 30 Simplified analysis Zones in reference to the proposed route of HS2 Postcode sectors Zone A Zone B Zone C HS2 route zones Source: CB Richard Ellis Research

35 APPENDIX 2 THE ROUTE Page 35 Appendix 2 The Route The route of the train line was mapped by hand onto CBRE s Geographic Information System. This was done by referencing the following plans, available at: High Speed Two Preferred Line of Route HS2-ARP-07-DR-RW HS2-ARP-07-DR-RW HS2-ARP-07-DR-RW HS2-ARP-07-DR-RW HS2-ARP-07-DR-RW HS2-ARP-07-DR-RW HS2-ARP-07-DR-RW HS2-ARP-07-DR-RW HS2-ARP-07-DR-RW Revised HS2-ARP-07-DR-RW Revised HS2-ARP-07-DR-RW Revised HS2-ARP-07-DR-RW HS2-ARP-07-DR-RW HS2-ARP-07-DR-RW HS2-ARP-07-DR-RW HS2-ARP-07-DR-RW HS2-ARP-07-DR-RW HS2-ARP-07-DR-RW HS2-ARP-07-DR-RW HS2-ARP-07-DR-RW HS2-ARP-07-DR-RW HS2-ARP-07-DR-RW HS2-ARP-07-DR-RW HS2-ARP-07-DR-RW HS2-ARP-07-DR-RW HS2-ARP-07-DR-RW HS2-ARP-07-DR-RW HS2-ARP-07-DR-RW HS2-ARP-07-DR-RW Key Plan HS2-ARP-07-DR-RW High Speed Two West Midlands Junction Key Plan HS2-ARP-05-DR-RW HS2-ARP-05-DR-RW HS2-ARP-05-DR-RW HS2-ARP-05-DR-RW HS2-ARP-05-DR-RW HS2-ARP-05-DR-RW All Published: 11 March 2010

36 APPENDIX 2 THE ROUTE Page 36 Appendix 2 The Route Map 1 Proposed route with positions of tunnels Source: Ordnance Survey; CB Richard Ellis Research Map 2 Proposed route zoomed to s 1 and 2 Source: Ordnance Survey; CB Richard Ellis Research

37 APPENDIX 3 - TUNNELS Page 37 Appendix 3 - s Map 3 - Start of 1 identifying postcode unit Source: Ordnance Survey; CB Richard Ellis Research Map 4 - End of 1 identifying postcode unit Source: Ordnance Survey; CB Richard Ellis Research

38 APPENDIX 3 - TUNNELS Page 38 Appendix 3 - s Map 5 - Start of 2 identifying postcode unit Source: Ordnance Survey; CB Richard Ellis Research Map 6 - End of 2 identifying postcode unit (best fit/adjacent) Source: Ordnance Survey; CB Richard Ellis Research

39 APPENDIX 4 ANALYSIS ZONES Page 39 Appendix 4 Analysis Zones Use of Postcode Sectors In this paper we have used postcode sectors as the basic geographical unit for all analysis. Postcode sectors have been chosen because of their size and compatibility with Land Registry data. In England the average postcode sector has 2,800 dwellings in it and covers 1900 hectares. This may seem large but each postcode sector has on average only 21.9 sales per quarter, and a sample of 20 is an absolute minimum in property market analysis. It is beyond the scope of this report to identify which properties are more or less affected by the proposed railway line. Individual properties will be affected by aspect, height relative to neighbouring properties and relative position. In this report we assume all properties in Zone A will be equally affected and do not account for any other factors. In Zone A, the average size of each constituent postcode sector 1,656 hectares. This means on average Zone A runs 2.29km either side of the proposed railway line. Data analysis Zone where line is over ground Data analysis zones are defined by the position of postcode sectors (e.g. HP6 5 ) relative to the proposed rail route. There are three zones and they are defined thus: Zone A All postcode sectors the proposed line passes through Zone B All postcode sectors which touch Zone A Zone C All postcode sectors which touch Zone B (Control sample) The purpose of Zone A is to capture areas closest to the proposed line. Zones B represents areas likely to be less blighted and C represent a control sample against which we can compare changes in activity. See map 7. Data analysis zones where proposed line is a tunnel In this report we treat analysis zones through a proposed tunnel passes differently. Where 1 runs through a postcode sector, we call it Zone A(T1). Equally where 2 runs through a postcode sector, we call it Zone A(T2). Zones B and C work essentially in the same for tunnels as they did for the normal railway line. However, where a zone could be considered either as relating to a tunnel or an over ground section, the latter takes precedence. See map 8 and 9. More and less densely populated areas In this report we have also differentiated between more and less densely populated postcode sectors. Using census data we established the number of dwellings per hectare in each postcode sector. We used the national median figure of 5 dwellings per hectare to separate the sample into more and less densely populated areas. This definition is separate from the data analysis zones and therefore permits another level of analysis. See map 1.

40 APPENDIX 4 ANALYSIS ZONES Page 40 Appendix 4 Analysis Zones Map 7 Analysis Zones A, B and C along whole proposed line Source: Ordnance Survey; CB Richard Ellis Research Map 8 Analysis Zones A, B and C along tunnelled sections of the proposed line Source: Ordnance Survey; CB Richard Ellis Research

41 APPENDIX 4 ANALYSIS ZONES Page 41 Appendix 4 Analysis Zones Map 9 All of Zone A running through more and less dense areas (tunnels excluded) Urban Rural Map Source: 10 Ordnance Zone Survey; A along CB Richard tunnelled Ellis Research sections through more and less dense areas. Source: Ordnance Survey; CB Richard Ellis Research

42 APPENDIX 4 ANALYSIS ZONES Page 42 Appendix 4 Analysis Zones Map 11 Analysis Zones around 1 portals Map 12 Analysis Zones around 2 portals Source: Ordnance Survey; CB Richard Ellis Research Source: Ordnance Survey; CB Richard Ellis Research

43 APPENDIX 5 - DATA Page 43 Appendix 5 - Data Source All data in this report comes from HM Land Registry. Time Span The original data was split into four quarters like so: Oct - Dec 2009 Jan - Mar 2010 Apr - Jun 2010 Jul - Sep 2010 Period 1 Period 2 Publication of proposals As the High Speed 2 proposals were released in March 2010, we have group together the first and second quarters into Period 1 and the third and fourth into Period 2. We therefore can compare between the data before and after the release of the proposals. Variables The analysis looks at sales volumes and average prices. The original Land Registry data are split down further into: Calculations Detached Semi-Detached Terraced Flat/Maisonette Total Changes for prices are calculated by taking the average price for all postcode sectors in Period 1 and comparing it to Period 2: Average((Period 2 Prices)- Average(Period 1 Prices)) / Average(Period 1 Prices) Changes for sales volumes are calculated by taking the sum of transactions for all postcode sectors in Period 1 and comparing it to Period 2: Sum((Period 2 transactions)- Sum(Period 1 transactions)) / Sum(Period 1 transactions)

44 APPENDIX 6 GLOSSARY OF TERMS Page 44 Appendix 6 Glossary of Terms Period 1 October 2009 to March 2010 Period 2 April 2010 to September 2010 Zone A Zone B Zone C Postcode sectors the proposed line passes through All postcode sectors which touch Zone A All postcode sectors which touch Zone B 1 NW1 7PS to W3 6XA (see map 2) 2 WD3 9XW to HP7 0EJ (see map 2) Sales volumes Sum of Land Registry transactions Values Average of Land Registry values More densely populated areas Areas with more than 5 dwellings per hectare Less densely populated areas Areas with fewer than 5 dwellings per hectare

45 Change P1 vs P2 APPENDIX 7 NATIONAL AND REGIONAL ANALYSIS Page 45 Change P1 vs P2 Appendix 7 National and Regional analysis Figure 28. Changes in sales values before and after the announcement of the proposed High Speed 2 route in all of England and Wales by house type 9% 8% 7% 6% 5% 4% 3% 2% 1% Flat/Mais Terraced Semi-Det Detached Figure 29. Changes in sales volumes before and after the announcement of the proposed High Speed 2 route in all of England and Wales by house type 8% 6% 4% 2% (2)% (4)% (6)% (8)% Flat/Mais Terraced Semi-Det Detached

46 Change Period 1 vs Period 2 Change Period 1 vs Period 2 APPENDIX 7 NATIONAL AND REGIONAL ANALYSIS Page 46 Change Period 1 vs Period 2 Change Period 1 vs Period 2 Appendix 7 National and Regional analysis Figure 30. Changes in values before and after the announcement of the proposed High Speed 2 route in the counties through which the line runs by house type Flats Terraced (5.0)% (10.0)% (5.0)% (15.0)% (10.0)% (20.0)% (15.0)% Semi-detached Detached (10.0)% (20.0)% (2.0)% (30.0)%

47 Change Period 1 vs Period 2 Change Period 1 vs Period 2 APPENDIX 7 NATIONAL AND REGIONAL ANALYSIS Page 47 Change Period 1 vs Period 2 Change Period 1 vs Period 2 Appendix 7 National and Regional analysis Figure 31. Changes in values before and after the announcement of the proposed High Speed 2 route in the regions through which the line runs by house type Flats Terraced Semi-detached Detached

48 Change Period 1 vs Period 2 Change Period 1 vs Period 2 APPENDIX 7 NATIONAL AND REGIONAL ANALYSIS Page 48 Change Period 1 vs Period 2 Change Period 1 vs Period 2 Appendix 7 National and Regional analysis Figure 32. Changes in volumes before and after the announcement of the proposed High Speed 2 route in the counties through which the line runs by house type Flats Terraced (5.0)% (10.0)% (15.0)% (20.0)% (25.0)% (30.0)% (2.0)% (4.0)% (6.0)% (8.0)% (10.0)% (12.0)% (14.0)% (16.0)% (18.0)% Semi-detached Detached (2.0)% (4.0)% (6.0)% (8.0)% (5.0)% (10.0)% (12.0)% (14.0)% (10.0)% (15.0)% (16.0)% (20.0)%

49 Change Period 1 vs Period 2 Change Period 1 vs Period 2 APPENDIX 7 NATIONAL AND REGIONAL ANALYSIS Page 49 Change Period 1 vs Period 2 Change Period 1 vs Period 2 Appendix 7 National and Regional analysis Figure 33. Changes in volumes before and after the announcement of the proposed High Speed 2 route in the regions through which the line runs by house type Flats Terraced (1.0)% (2.0)% (3.0)% (4.0)% (5.0)% (6.0)% (7.0)% (8.0)% (9.0)% 3.5% % % % Semi-detached Detached

50 APPENDIX 7 NATIONAL AND REGIONAL ANALYSIS Page 50 Appendix Appendix 78 National Study Limitations and Regional analysis It is beyond the scope of the report to distinguish high end properties as we only classify them in terms of their Land Registry property types. The report only considers house type and proximity to the route and does not account for: House type-specific seasonal supply/demand variations Issues affecting local markets Issues affecting demand for particular types of property Macro-trends in mortgage lending Inconsistent sample sizes owing to local sales patterns It should also be noted that the smallest geographical boundaries are relatively large and it is possible that (as the route skirts around towns) zones B and C may be more urban than zone A.

51 APPENDIX 8 S Page 51 Appendix 8 S