For many Edinburgh residents there are few things that will raise the hackles quite like the subject of trams. Originally proposed way back in 2001, the trams were intended to modernise the Capital’s public transport system but a combination of delays, rising costs and disruption from roadworks made them the bête noire of many locals.
Almost three years after they were introduced though, evidence would seem to suggest that we have become more accepting of the trams. More people are using them and profits appear to be ahead of schedule.
The Council has now started the bidding process for an extension of the network which would take the trams through Leith and out to Newhaven. Earlier this year, research from the Bank of Scotland suggested that since their introduction the trams have already had a positive impact on house prices near the tram lines, and this has led to speculation that the extension could have a similar effect on property prices in the Leith area.
So, have trams really helped to fuel house price growth, and should Leith residents be expecting to see a jump in the value of their homes if the proposed extension goes ahead?
Why Would Trams Increase Property Prices?
The theory behind why trams would increase property prices is pretty simple. Improvements to transport links make a property more desirable to potential buyers as it will make access to the other areas of the city easier. If a property is more desirable to potential buyers then logically it should attract more demand and thus command a higher price.
Evidence from other European cities like Dublin, where the Luas tram system was introduced in 2004, supports this theory. Following introduction of the system property prices along the line grew faster than in other areas of the city.
What Impact has There Been on Edinburgh Property Prices?
A press release from Bank of Scotland issued in May this year stated that “house prices close to the Edinburgh tram route have been boosted by improved transport links” in the three years since the trams were introduced.
On the face of it this would appear to be great news for homeowners in these areas. If true, it would also mean that residents in Leith and Newhaven could reasonably expect to see the value of their own homes rise if the extension is given the go-ahead.
On closer inspection however we can see that any optimism should probably be tempered. The claim that house price growth has been fuelled by the introduction of trams is based on two factors.
Firstly, it is noted that in the two years since trams were introduced in 2014, house prices near the tram route rose much more sharply than in the preceding two year period. A 10% rise was seen between 2014 and 2016, compared to a rise of just 3% between 2012 and 2014.
The problem with this conclusion is that we saw almost exactly the same thing happen across the city as a whole. Based on ESPC data, between 2014 and 2016 the average house price across Edinburgh rose by 9% compared to just 2% between 2012 and 2014. In simple terms, the market was more buoyant generallybetween 2014 and 2016 than in the two years prior irrespectivee of the introdution of trams.
The research also notes that house prices in the EH11 postcode district – where the tramline runs through – rose almost twice as fast as elsewhere in the city in the two years since trams were introduced.
This again appears to be compelling evidence of the positive impact that the trams have had, but closer inspection again reveals a different picture. In the EH12 postcode district which also includes a number of stops along the tramline, house prices were found to have risen by just 1% in the two years since trams were introduced – way below the level of growth seen citywide.
The fact that there hasn’t been a consistent picture along the tram line for house prices strongly suggests that it is other factors which have influenced inflation.
What Does it Mean for House Prices Along the Proposed Extension?
At this stage the evidence is simply too limited to conclude that trams have positively impacted house prices near the tramline in Edinburgh. Based on the anecdotal feedback we get from buyers, proximity to the tramline is not a significant consideration when looking for a new home. From speaking to a number of surveyors, it also isn’t a major consideration when carrying out property valuations.
It’s important to note however that this does not mean that trams won’t have a more positive impact going forward. The trams were viewed negatively by a large number of people when they were first introduced but as people become more accustomed to them it’s possible that attitudes will change and more people will come to see their benefits.
An improvement to the network such as the proposed extension would also make the trams more useful to a larger number of residents and this could again lead more buyers to seek out homes nearer to the tramline, positively impacting prices.
The theory behind why improved transport links should help boost house prices remains sound. If some of the problems we saw during the original implementation of the trams can be avoided during the extension then it’s likely that we would see a more positive impact on Edinburgh property prices near the tramline in the years ahead.