"Many other cities around the world place a high importance on improving air quality and so whilst we’re certainly seeing a period of adjustment within the property market, in the long run, the ULEZ could well become a factor that attracts homebuyers, rather than deterring them"
- Marc von Grundherr - Benham and Reeves
It was recently revealed that the controversial Ultra Low Emissions Zone and its expansion across the capital has helped to dramatically improve London’s air quality.
However, an analysis of London house prices, conducted by Benham and Reeves, shows that property market performance has trailed the wider London market across each borough to have been hit by the ULEZ expansion.
Initial introduction
The research shows that over the year following its original implementation in April 2019, the London property market as a whole saw house prices increase by 1.4%.
The six original ULEZ boroughs of Camden, Westminster, Lambeth, Southwark, Islington, and Hackney, along with the City of London, saw an average rate of growth of 5.9% during the same year.
However, house price growth since the original implementation of the ULEZ now has climbed to 9.2% across London as a whole, whilst these seven locations have seen an average rate of growth of just 5.9% during the same period.
First expansion phase
Controversy continued to grow as the ULEZ expanded and in October 2021, phase 2 of the scheme was rolled out, adding Hammersmith and Fulham, Haringey, Kensington and Chelsea, Lewisham, Newham, Tower Hamlets, Wandsworth and Waltham Forest to the list of boroughs impacted.
In the year that followed, house prices across these Additional boroughs climbed by 3.8% versus 6.4% across the London market as a whole. Between October 2021 and today, London house price growth has slowed to just 1.7%, however, across those boroughs impacted by phase 2 of the ULEZ, house prices have fallen by an average of 3.6%.
Second expansion phase
Phase 3 of the ULEZ implementation and the second phase of expansion saw a further 18 London boroughs fall within its boundaries as of August 2023. Again, house price growth across these 18 additional boroughs trailed the wider London average over the year that followed, increasing by just 1% versus 1.8% across the capital as a whole.
“The evidence suggests the Ultra Low Emissions Zone has had a very positive impact on the capital’s air quality and this is certainly a positive," said Director of Benham and Reeves, Marc von Grundherr.
However, he added, "Its implementation and expansion has been met with a great deal of controversy over the last five or so years, particularly by London homeowners who feel they have been further penalised financially for living within the capital.
"Whilst it hasn’t been a predominant factor, it has certainly contributed to more buyers being pushed from the inside out, as they look to reduce both the cost of buying and ongoing cost of living in the face of a far higher cost of living, not to mention higher mortgage rates.
He concluded, "Many other cities around the world place a high importance on improving air quality and so whilst we’re certainly seeing a period of adjustment within the property market, in the long run, the ULEZ could well become a factor that attracts homebuyers, rather than deterring them.”
