Paying for convenience: how supermarkets affect house prices

For anyone investing in a property, looking at what local amenities are on offer is a vital part of the research, and it seems that even the presence of a budget supermarket makes an area more desirable – and bumps up house prices.

The “Waitrose effect” on property prices in an area is nothing new, but the latest analysis from Lloyds Bank has revealed that even low-cost supermarkets such as Aldi and Lidl have now begun to boost property prices in the UK, demonstrating how much people really value living near the convenience of local amenities.
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On average, living near any supermarket will put up the price of an average UK property by £21,500 compared to homes in the wider area. Waitrose is still synonymous with the highest level of affluence, though, pushing up house prices by a huge £43,571 for those lucky enough to live near one. This is closely followed by Marks & Spencer, which saw nearby homes selling for £40,135 more than comparable properties further afield.

If you want to own a home within walking distance of a Sainsbury’s, you can expect to pay an additional £32,707, while supermarket giant Tesco pushes prices up by £21,369, followed by Co-Op (£21,020) and Iceland (£17,445).

Sticking to budget

But recently, the likes of Aldi and Lidl, which are increasingly popular budget supermarkets, among other cheaper stores, have also seen nearby house prices being affected by their presence. People living near an Aldi, Lidl, Morissons or Asda have seen house prices grow by an average 15% over the past four years, compared to 10% when taking all supermarkets into account.

Being in close proximity to a Lidl will boost property prices by an average of £5,411, while living a stone’s throw from Aldi will cost an extra £2,301 for the average homebuyer.

Andy Mason, Lloyds Bank mortgages director, said: “It’s easy to assume the effect of different factors on the value of a property but this research clearly shows that there is a significant link between the convenience of a local supermarket and house prices.

“The Waitrose factor has been known for some time and although the likes of Aldi can’t yet boost house prices in quite the same way, the research shows that all stores are now having a positive effect on local property prices.”

How landlords and investors could benefit

Although the research does not cover how proximity to a supermarket affects rental values, previous analysis has indicated that tenants will be willing to pay more to live near the convenience of local amenities.

Despite the higher property prices associated with buying near a supermarket, the figures from Lloyds are something that buy-to-let landlords and property investors should bear in mind when considering their next investment. If you’re thinking of buying a property in an area where there are plans for a new Lidl or Aldi, according to the recent trends, it could turn out to be a very shrewd move.

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