Buyers are willing to pay a premium to live close to train stations

Buying within 500 metres of a train station in a major city could cost tens of thousands of pounds more than buying 1km further away, a study has revealed. Significant price premiums were found around stations in Glasgow, Manchester and London, according to analysis by Nationwide Building Society.

The research found that London homebuyers pay the biggest premium to be close to a station. It found properties within 500 metres of a station attract an 8 per cent premium compared to identical homes 1,500 metres from the station. This equates to approximately £42,700 based on average prices in London over an otherwise identical property 1,500m from a station. Homes located 1,000m away from a station command a 3.5 per cent premium, while those located 750 metres from a station command a 5.6 per cent.

Glasgow has the largest network of suburban railway lines in the UK outside of London. Within the Greater Glasgow area, there are around 155 railway stations, with a further 15 subway stations in Glasgow city centre. The analysis suggests homebuyers paid a 4.6 per cent premium for a property within 500metres from a station compared with an otherwise identical property 1,500metres away.

Someone buying in Manchester within 500metres of a rail or Metrolink currently pays 4.9 per cent more than someone buying an identical home 1,500 metres away. In cash terms that equates to an average premium of £10,900 in Greater Manchester to live near a station.

While there is a significant premium paid by people buying nearer to transport links within cities, it's worth noting that this premium has narrowed since 2021. For example, in Glasgow there was a 7.2 per cent premium identified by Nationwide in 2021 compared to 4.6 per cent today. Meanwhile its analysis also suggests that station premiums in London are somewhat lower compared with 2021, London buyers were paying 9.7 per cent more for homes within 500 metres of a station in 2021 compared to 8 per cent today. However, London station premiums are broadly similar to pre-pandemic levels, where a property located 500m from a station attracted an 8.6 per cent premium.

Manchester has also seen its 'station premium' dips from 6.1 per cent to 4.9 per cent since 2021. Buying agent Jonathan Hopper of Garrington Property Finders believes that the price premium has reduced since 2021 as people have adapted to more flexible work arrangements. 'The fall in premium since 2021 is a reflection of the post-Covid reality that many professionals have the option to work from home for some of the week,' says Hopper. 'They're still willing to pay a premium for a quicker or easier commute but the difference is less stark given that they may not need to commute in all five days a week any more.'

Estate agent Jeremy Leaf, a former Rics residential chairman, also believes the impact of the pandemic has skewed property prices somewhat, however he says that being close to a station will continue to attract a premium going forward. 'It is hard to generalise too much as averages always hide ups and downs, highs and lows,' adds Leaf. 'Generally, movement follows the pattern of work, with people wanting to be nearer to stations and transport hubs and prepared to pay extra for that convenience. 'It can also be for family and personal reasons but it is usually driven by work. This is particularly the case for those who work unsocial hours or feel a sense of vulnerability the further away they are from a station or transport hub.'

Four in five Londoners say being near a station was either 'fairly important' or 'very important' when choosing to buy or rent their current property, according to separate research by Nationwide. Meanwhile, in Glasgow and Manchester, around 60 per cent of respondents stated being near a station was either 'fairly' or 'very important'. Those living in London typically use their local station more often, with nearly 60 per cent using either rail or tube more than once a week.

This compares with 37 per cent in Glasgow for rail and subway and 35 per cent in Manchester for rail and Metrolink. 'Our recent market research confirms that transport links remain important to those living in major cities,' said Andrew Harvey, senior economist at Nationwide. 'London homebuyers continue to be willing to pay a significant premium for being close to a station compared with those in Glasgow and Manchester. 'This is consistent with our market research findings and likely reflects the greater reliance on public transport in the capital.'