London’s Ultra Low Emission Zone (ULEZ) has started to hurt house prices, as its designated low-emissions zones fail to match the wider price growth in different areas of the capital, according to the latest research by lettings and estate agent, Benham and Reeves.
Benham and Reeves analysed house price data in London boroughs that fell within the ULEZ boundary following phases one and two of the scheme’s rollout, compared to the performance of the London market, and considered what it could mean for those boroughs due to be impacted with the phase 3 roll out.
The initial ULEZ pilot scheme launched in April 2019 and covered the existing Congestion Charge zone, but had little impact on house prices.
While it did impact seven boroughs, the zone only marginally crept into six of them while fully engulfing just the City of London.
As a result, in the year that followed, house prices increased by 5.9% in ULEZ-impacted boroughs versus 1.4% growth across London as whole.
This price resilience was attributed to the fact that homeowners were already accustomed to the Congestion Charge, and that personal car usage was less prevalent due to the dominance of public transport in central boroughs.
However, the second phase of ULEZ may have had a more negative impact.
The impacted boroughs experienced average price growth of 5.3% over the 12 months the following October 2021 rollout, which this time fell short by -0.5% compared to the wider London performance of 5.7%.
Nine of the 16 boroughs affected by phase 2 of the ULEZ expansion failed to outperform the rate of house price growth seen across the wider London market over the year that followed.
Westminster was the worst hit borough, experiencing a 5% price drop between October 2021 and October 2022, while Kensington and Chelsea and Hammersmith and Fulham also experienced negative growth of -4.1% and -1.1% respectively.
Other boroughs to lag behind the wider London average included Wandsworth (3.3%), Camden (3.3%), Islington (3.3%), Lambeth (3.5%), Haringey (3.9%), and Lewisham (5.2%).
Marc von Grundherr, director of Benham and Reeves, said: “Many Londoners rely on their cars to hold down jobs and care for their families, and yet another tax attack from Sadiq Khan will hit them financially at a time when millions are already struggling with the high cost-of-living.
“The figures show that ULEZ impacted boroughs have trailed the wider London market by around half a percent when it comes to house price growth in the year following the ULEZ rollout, which accounts to well over £2,000 on the average London home.
“When the scheme launches across the entirety of the capital, this could see London homeowners out of pocket by thousands of pounds and those in the most peripheral boroughs could be hit far harder.”
He concluded: “So not only do they face the cost of either paying this latest tax grab or replacing their car, but their property’s value could also be negatively impacted.”
