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Kick start

Euro 2004 is well underway and while the domestic season might have finished other trends are just emerging concerning those housed in the shadow of the Premiership&#39s elite.

Top-flight football is notorious for its excesses, inflated wages, agents&#39 and transfer fees but over the past few months UK house prices have been soaring to levels that would make even footballers&#39 eyes water.

The Monetary Policy Committee and the government, among others, are examining ways of putting the brakes on housing inflation but in the absence of affordable and desirable housing stock, prices continue to escalate.

So are there links between the football homes of Premiership clubs and local house prices? The research this article is based on was conducted by UK Valuation and looked at the past two years&#39 house price valuations. It took into account club success as defined by league position and the behaviour of localised property prices during a soccer season.

While the results in no way prove that the performance of a football club directly affects house prices in the local vicinity – Leeds fans breathe a sigh of relief – they give an insight into the opportunities of living and investing near football grounds and the returns to be made on buying in the right area, even if it is near the wrong club. They also raise the question of whether the house price indices that create the property shock headlines are really valid.

UK Valuation analysed its property value database by postcode for typical terraced Victorian housing near the football clubs&#39 ground locations. Data from surveyors&#39 mortgage valuation reports for lenders was also used.

And top of the price Premiership, we find two of London&#39s most affluent football clubs. In terms of property values, London clubs, unsurprisingly, top the league with Newcastle&#39s average property value of £223,000 being the only entrant to block the capital&#39s giants dominating the top five spots. But look again.

If we analyse growth in property prices, Newcastle storms to the top of the table with growth around St James&#39 of 69%, followed closely by Liverpool&#39s 65%. Its clear that while average house values are high in the capital, they are not presenting as good returns as are other hotspots around the UK.

Nevertheless, the two areas with the highest property values are synonymous with the teams that contested so many football honours last season. Chelsea and Arsenal enjoyed differing fortunes over the season but residents near both clubs saw 13% growth for the year on their house prices.

In terms of average house price value, the stark reality of London life sees Chelsea topping the league with properties near Stamford Bridge weighing in at £855,000 and Highbury&#39s residents coming in third at £581,000. Second place in this league went to Fulham with an average property value of £593,000. FA Cup winners Manchester United, while slipping in the league, saw 38% property price growth around Old Trafford, with Liverpool scoring a fine 65% growth and an improvement of one place over last season.

And the top clubs and their local residents seem set for further growth and honours.

Broadly speaking, investment and European ambitions show no sign of abating but at a local level the picture is more complicated.

In the London area it is no surprise that homes around football clubs in general have higher average property values than those elsewhere in the UK but within that group, price performance, like the football, has varied considerably.

The top property performer over the past two seasons has been Fulham with local price growth a full 7% higher than metropolitan rivals Charlton who saw a growth figure of 15% around their Valley ground.

Arsenal, Chelsea and Tottenham all turned in creditable growth performances of 13% over the period while in footballing terms, Tottenham stuttered to the worst Premier League position of the capital&#39s teams. Given the equal property growth at Tottenham, Arsenal, and Chelsea, it seems that the influx of Russian money into Stamford Bridge has yet to make any real impact outside the ground (and some would say inside it too).

But housing hopes around at least three of the London clubs remain high. Peter Shaw, branch manager of estate agent Kinleigh Folkard Hayward in Fulham, believes the rumoured sale of Craven Cottage helped property prices in the area, and the improvements made to the stadium since that time have benefited the environment which now hosts a new generation of families.

Similarly, Highbury residents should benefit over the longer term from Arsenal&#39s move to a new stadium as developers add further value to the area, while the effect of Chelsea&#39s new-found wealth will surely impact the surrounding areas which have already enjoyed a renaissance over the past 10 years.

Look up north and differences become more extreme, even when comparing locations relatively close to one another. This season Liverpool has outperformed local rivals Everton on all fronts. Despite finishing fourth in the soccer stakes and sacking their manager, property values around Anfield rose 65% compared with 45% at Goodison-based neighbours, Everton. However, Everton&#39s 17th place finish in the Premiership took the shine off any property price growth.

Phil Furlong, associate partner at the Venmore Partnership, believes the fates of the two areas mirrors the relative fortunes of the clubs. The area around Anfield has a broader range of housing stock to offer purchasers and investors and while both areas are enjoying a period of catch-up with the rest of the UK market in general, Anfield&#39s good fortune dates back to planning decisions taken pre-Shankley.

In the North-East, the star remains Newcastle, enjoying growth of 69% in the St James&#39 Park area while Premiership neighbours Middlesbrough saw a 25% increase near their Riverside base. Nick Manson, managing director of Manson&#39s Estate Agents in Newcastle, believes the St James&#39 Park area continues to benefit from new developments.

The successful development and letting of offices at Carliol City Gate and East Quayside show that the city centre continues to be an attractive business and residential location. Developments on Grey Street (Lloyds Court), Westgate House, at Broad Chare and at Gallowgate will only reinforce this trend. The football club is a real positive for the town.

The differences between the two clubs in the North-East are more pronounced when seen over a five-year period. In 1999 the average value of terraced property in Middlesbrough was £26,000 and now stands at £45,000. This represents a rise in value by a factor of 1.73. That compares poorly with Newcastle&#39s St James&#39 Park area which in 1999 had an average value of £79,000 that has since soared to £223,000 – rising by a factor of 2.82.

This highlights an important issue for brokers and lenders if indexation is being used in underwriting deals. As an example, if you use the Halifax House Prices Index for this area to make a decision, it is showing a growth factor of 2.1 for the same period. Crucially this figure is applied by Halifax to both areas under the broad title of &#39North-East&#39.

A lender having advanced 90% on a £50,000 property in 1999 would now expect a valuation of £50,000 x 2.1 according to the Halifax Index. But the real figures are £141,000 for St James&#39 and £86,000 for the Riverside. The lender will either potentially miss the risk of lower equity growth of £36,000 at the Riverside or the opportunity of greater growth of £91,000 at St James&#39.

In the Midlands the obvious losers were Wolverhampton, turning in an average property price of £77,000 compared with Aston Villa at £95,000 and Birmingham&#39s £108,000. Growth for the latter two ranged from 9% to 26% respectively. But it was Villa who brought home the football plaudits finishing sixth above 10th-placed Birmingham and relegated Wolves.

Lynette Peach of Allan Watts and Co in Birmingham believes that the area around St Andrews (Birmingham City) has traditionally been a better buy than that around Villa Park. Average value and growth figures reflect the relative profiles of the areas.

At the wrong end of the footballing table, Leeds fans can console themselves that while all the fun of Division One awaits the team from Elland Road, local residents have enjoyed a relegation-defying increase of 52% on the value of their homes, greater even than the 38% enjoyed by those living in the shadow of arch rivals across the Pennines, Manchester United.

Man U might not have snaffled all the silverware last season but it seems that the mere presence of one of the world&#39s biggest clubs is enough to attract property investors&#39 gold to the surrounding streets. House prices near Old Trafford have continued to perform well though now growth is probably slowing from a reported high of 51% last year. Properties near to Old Trafford football and cricket grounds continue to be big winners for Manchester.

While Manchester City&#39s move from Maine Road to the City of Manchester Stadium means comparisons here are not possible, average house prices in the new area are 14% lower than those around Maine Road. If the model for other clubs holds true, values in the Maine Road area should rise as the developers move in.

Plans recently submitted as part of a local regeneration project envisage the former home of Manchester City as a &#39neighbourhood of character&#39 with properties including family units, state-of-the-art apartments, accommodation for the elderly and at least some rented houses. Quieter areas around Maine Road in Fallowfield, Rusholme and Withington have have seen property price rises of up to 25% in three months.

Relocation can be an important catalyst for house prices.

Another redeveloped Premiership ground is Burnden Park, the home of Bolton Wanderers for 103 years. The ground was demolished in 1997 and Wanderers moved to the ultra-modern Reebok Stadium. And Middlesbrough&#39s former home, Ayresome Park, is now a suburban housing estate.

Football&#39s image has changed and relocation doesn&#39t necessarily mean good news only for the development of old sites. While prices near City&#39s old Maine Road site have risen now the club has left Moss Side, prices near the club&#39s new stadium in Eastlands jumped 30%.

Of course, this light-hearted football-based research highlights a more serious thought – that many house price indices are flawed because of their lack of sensitivity to the local area. Everyone can tell local stories of house prices moving wildly out of synch with the area in general, driven perhaps by the popularity of a particular school. Liverpool vs. Everton provides a good example of how a supposedly homogeneous area like Merseyside can enjoy very different rates of growth within itself – a 19% difference in fact.

The broad-brush approach continues because housing indices generate quick and easy media coverage. All valuations are opinions but some underpin property transactions while others are gleaned from comments by estate agents or banks, all of whom have an agenda. Generalisations have the unfortunate unintended consequence of fuelling the boom and bust stories that in turn drive erratic consumer and investor behaviour.

The role of advisers is therefore crucial in moderating rash decisions by novice investors on the back of broad statements and assumptions seen in the headlines.

As Venmore&#39s Furlong points out, only advisers can highlight issues such as the parochial mindset in some areas. Anfield and Goodison may only be half a mile apart but residents consider themselves to be from different worlds. With investors from the South-East piling in to shore up their flagging pensions, buying on the back of generalisations is fraught with danger.

The potential for price growth in homes based near the temples to our national game remains but differing growth rates within areas is a story only detailed analysis can reveal.

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