The Waitrose Effect: if a supermarket flaps its wings, does a house price hurricane follow?
- Credit: PA Archive/Press Association Ima
Average house prices close to a Waitrose command double those in areas with an Aldi says Lloyds report. But do supermarkets command a higher asking price, or simply follow the money?
Say what you like about Waitrose Essential cappuccino mousse, cardamom and black pepper body wash and Cypriot light halloumi, the supermarket is known to attract a particular type of shopper. The type to revolt at the thought at non-Waitrosians usurping the free coffee offer typically reserved for yummy mummies doing the weekly shop.
It’s not just the label that matters; having a Waitrose on your doorstep could add a premium on the value of your home. According to a new report from Lloyds Bank, areas with a Waitrose nearby on average cost 9.3 per cent more than the surrounding area.
That’s equivalent to £36,480 per shop premium, with price increases in postal areas with a Waitrose increasing 8 per cent since 2014.
Barnet, NW11 came seventh on the list of top supermarket locations with largest house price premiums, raking in a premium of £380,864 to be close to a Waitrose, Sainsbury’s and Marks and Spencer store in Golders Green.
Nationally, homes located close to a national supermarket command premiums of £22,000 on average. Waitrose came top of the polls for regions with the largest price premiums in eight out of ten regions, followed by Marks and Spencer, commanding £29,992 more than homes further afield, Sainsbury’s demand £26,081. “Even”, says the report, having a store like Iceland nearby allows houses to demand premium prices of £22,767.
Andy Mason, Lloyds Bank mortgages director says: “With homes in areas close to major supermarkets commanding a premium of £22,000, the convenience of doing weekly shopping within easy reach may well be a pull for many homebuyers looking for good access to local amenities…But the research also shows that areas with ‘budget’ stores have, on average seen the most rapid house price growth in recent years.
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“There has been some suggestion that the likes of Lidl and Aldi are increasingly locating in more affluent areas where prices are already relatively high. Indeed, in 2014 house prices in areas with a Lidl were, on average, £4,700 lower than in neighbouring areas; today they are £6,400 higher.”
Properties close to a budget chain such as Aldi, Lidl, Morrisons or Asda have seen the largest growth in prices at 11 per cent or £21,400 since 2014. Homes close to a Lidl command premiums of £6,416, with Aldi putting an extra £20,000 on the price.
That said, it has to be admitted that house prices are rising nationally, with or without a supermarket close by. Supermarkets settle in areas where consumers will pay for their goods; it follows that in more expensive areas you’ll find a Waitrose, and in less pricey suburbs you’ll find an Asda or Lidl.
So do agents really charge more for properties if they can stake a claim to a Waitrose in the suburbs? And do house hunters really turn their noses up at a decent property if they can’t get their hands on Waitrose Essential rosemary and sea salt focaccia within five minutes of leaving the house?
Nibs Lakhani, director at Goldschmidt and Howland in Hampstead is sceptical about the results of the study on the ground. “This is already quite an expensive area so I don’t know how much it’s going to add to the value of your house in this area particularly. I think maybe in the suburbs it does.”
Enter ‘Waitrose’ into Google maps and you might expect Hampstead to light up like a Christmas tree, but surprisingly, there are a range of supermarket chains including budget stores like Aldi and Iceland in the vicinity of NW3.
“Really, here there only is a Tesco and you go to Finchley Road if you want to hit the big supermarkets; there’s a Waitrose and a Sainsbury’s there,” says Lakhani. “West End Lane now has a Marks and Spencer’s and a Waitrose,” he adds.
The range of shops on offer is certainly tailored to a particular type of consumer. “I live in West Hampstead, and a Waitrose opened at the bottom of my road and I can’t tell you how happy I was when one opened up,” says Lakhani. “So is it good news for the area? I think everyone is happy that is a local resident; they’d rather see a Waitrose than a Tesco by a long way.”
House prices on Frognal on average sold for £3,493,600 according to Zoopla.com. Might that have anything to do with the Little Waitrose round the corner?
In this case, it’s worth remembering that orrelation does not imply causation. It’s more likely that Waitrose set up shop there to take advantage of shoppers who have already paid premiums for a home with such an exclusive street address.
Do buyers ask when hunting for property in north London? “Not in Hampstead. Most people move within ten roads of where they live so they pretty much know exactly what’s where,” Lakhani explains.
Properties on The Vale in Golders Green on average sold for £1,020,000, markedly less with homeowners slumming it with a Sainsbury’s and Sainsbury’s Local nearby. Prices paid on Arlington Road, Camden Town reached higher at £1,170,500 with budget chain Lidl next door. On Elgin Avenue in Maida Vale, £893,893 was the average paid with Tesco the nearest chain supermarket. It seems that house prices don’t necessarily follow suit when it comes to savvy shopping and house prices.
In any case, the Lloyds study might need to get with the times and update its data to reflect the number of people who shop for can’t-live-without Waitrose Essential majestic basil and equally essential Ardennes pâté online.
“When the average house sale around here is about £3.5 million, most people just use Ocado,” laughs Lakhani.