Homes within easy reach of a local supermarket are, on average, £21,512 higher than in nearby areas, according to new research from Lloyds Bank.
Properties in areas with a Waitrose, Marks and Spencer, Sainsbury’s or Iceland are most likely to command a higher house price premium when compared to the wider town average. And prices near upmarket supermarket brands can be particularly high. For example, the average price for properties within easy reach of a Waitrose is typically £36,480 higher than the wider town average (£429,118 versus £392,939).
Those living close to a Marks and Spencer have the second highest premium, with properties worth an average of £29,992 more than homes further away, followed by Sainsbury’s (£26,081) and even discount chains like Iceland (£22,767) command a strong premium. Homes within easy reach of all four supermarket chains are trading at an average premium of 9%.
House prices close to an Aldi, Lidl, Morrisons or Asda have grown by an average of 11%, or £21,400, since 2014. This is a faster increase than for all supermarkets (9%) and marginally higher than for all areas in England and Wales (10%). In postal districts with an Aldi, the average house price has grown from £178,809 in 2014 to £198,810 in 2017 – an increase of £20,000. In addition, areas with a Lidl have seen average price grow of £23,722 (from £216,258 to £239,981). However, in cash terms the largest price increases remain in postal districts with a Waitrose – £33,015 (from £396,104 to £429,118) or 8%.
The average house price in an area with a Waitrose store is £429,118 – the most expensive of all the chains – and more than double compared to areas with an Aldi store (£198,810), which is the least expensive. The next most expensive are areas with a Marks and Spencer (£350,263) and Sainsbury’s (£314,154).
Andy Mason Lloyds Bank mortgages director, said: “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.
“The ‘Waitrose Effect’ is clear; having a premium brand on your doorstep means buyers typically need to pay top prices. But the research also shows that areas with ‘budget’ stores have, on average, seen the most rapid house price growth in recent years.
“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.”
In eight out of 10 regions across England and Wales, properties command a premium price compared to other areas in the same town where there is a Waitrose. The greatest house price premium, in cash terms, that can be aligned to a supermarket presence is in the North West. Areas with a local Waitrose store in the region command an average price that is £80,272 (38%) more than the surrounding town. This is followed by the same supermarket brand in the West Midlands (£76,812 or 40%) and Yorkshire and the Humber (£53,924 or 30%).
This review also looked at locations with the highest area to town house price premium, with, Ponteland in Newcastle and Chiswick in Hounslow commanding the greatest average property prices when compared with the surrounding town or local authority borough average.
The average house price in Ponteland, which has a Waitrose, Sainsbury’s and Co-Op, and Chiswick, which offers residents a Waitrose, Sainsbury’s and Marks and Spencer, is 104% and 89% higher respectively than in surrounding areas. In cash terms the premium to live in Ponteland is £200,856 higher than in Newcastle as a whole (£393,502 v.£192,646); whilst in Chiswick this figure is more than double at £444,011 when compared to the average price for the borough of Hounslow (£940,218 v. £496,207).
In the 10 locations with the highest premiums, eight feature Waitrose, Sainsbury’s and Marks and Spencer. The remaining two areas are Chorlton and neighbouring Didsbury in Manchester with a house premium of 74% or £125,945 and 58% (£98,043) respectively. These areas are dominated by Morrisons, Co-Op, Aldi and Tesco.
