Property 2006 No1.P65
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International Journal of Strategic Property Management (2006) 10, 5163 51 RESEARCH ON THE PRICES OF FLATS IN THE SOUTH EAST LONDON AND VILNIUS Saulius RASLANAS 1, Laura TUPËNAITË 2 and Tadas ÐTEINBERGAS 3 1 Department of Construction Economics and Property Management, Vilnius Gediminas Technical University, Saulëtekio al. 11, LT-10223 Vilnius, Lithuania. E-mail: [email protected] 2 Strategic Analysis Unit, Vilnius Gediminas Technical University, Saulëtekio al. 11, LT-10223 Vilnius, Lithuania. E-mail: [email protected] 3 Barnfield Construction Ltd, 8 Kenyon Rd, Nelson, BB9 5SP, U.K. Received 11 May 2005; accepted 23 September 2005 ABSTRACT. Mathematical statistics methods were applied to analyse the pricing of two bedroom flats in South-eastern London and similar sized three room flats in Vilnius. Analysis revealed that the average prices of Vilnius three room flats are 4-5 times less comparing to prices of two bedroom flats in South-eastern London. Also flat prices influencing factors such as living space, dwelling condition, communication, parking space, additional space, storey, etc. were compared. It was found that some additional factors are influencing dwelling prices in Vilnius rather as in London. More attention must be paid on multi-storey buildings age and construction type. These factors are important in Vilnius living areas where panel buildings are common Antakalnis, Fabijoniðkës, Paðilaièiai, Ðeðkinë, etc. Other pricing influencing factors are similar to London, most often the condition of the flat is the most important factor to Vilnius three rooms dwelling pricing. As Vilnius is much smaller than London, communication and parking area do not have much influence on dwelling prices. Similar to London, the space of dwelling is more important factor in Vilnius living areas than in central parts of the city and prestigious districts. KEYWORDS: Correlative-regressive analysis; Significant factors; Prices for one square metre in residential areas 1. INTRODUCTION nomic, social and cultural progress in recent years. London is a huge metropolitan city, one of Although prices of flats have been con- the main world centres of trade, finance and stantly growing in Vilnius in recent years, it culture, a capital of an economically strong must be admitted that they are considerably country and the centre of the former largest lower than in London. Such tendencies are world empire. London is characterised by the determined not only by different economic de- expensive living and one of the highest dwell- velopment level in Lithuania and in Great Brit- ing prices in the EU. ain but also by many other factors which must Vilnius is the capital of the country which be considered while determining prices of flats is among the most competitive capitals in the and forecasting their values. For this purpose transition period. Vilnius is characterised by various mathematical-statistical methods may an exceptionally rapid growth of dwelling be used. For example, scientists of Glamorgan prices, life quality improvement and rapid eco- University (Great Britain) Wilson, Paris etc. International Journal of Strategic Property Management ISSN 1648-715X print / ISSN 1648-9179 online © 2006 Vilnius Gediminas Technical University http://www.ijspm.vgtu.lt 52 S. Raslanas et al. offer to use neural networks to forecast prices Croydon) are less densely populated and are of flats [18], US scientists Sieg, Smith, etc. rec- dominated by semi-detached or sometimes low ommend to use regressive modelling based on detached houses, and the supply of flats most transformation of non-homogeneous data on often consists of premises in these houses of prices of flats to homogeneous for the evalua- various layouts. tion of the factors which determine the value The areas located near the centre (Lambeth of a dwelling as well as determination of the and especially Southwark) are dominated by real value of a dwelling [16]. dwelling houses of five and more storeys. Mathematical statistics methods may be Greenwich and Lewisham areas are domi- also used for the comparison of prices of flats nated by semi-detached houses, a number of and the determining factors in different coun- multi-storey buildings among them (their num- tries. In this case, flats with two bedrooms lo- ber increases approaching the centre). Types cated in the South East London area and ana- of flats are diversified compared to the newly logical (according to the total area) three-room constructed areas of Depford and Woolwich and flats in Vilnius were selected for the research; other areas located at the river where a large their prices were determined using statistical scale project Thames Gateway is being imple- methods, and the factors determining prices mented. The project includes construction of of flats were identified and compared using new dwellings, improvement of infrastructure, correlative-regressive analysis. transport system and education system. The area of Greenwich is attractive to con- struction companies, because there still are a 2. PRICES OF TWO-BEDROOM FLATS number of abandoned former docks alongside IN THE SOUTH EAST LONDON AND of the river (the northern part of the Green- THE DETERMINING FACTORS wich area and the southern parts of Newham London is among the most densely popu- and Barking&Dagenham areas are often sim- lated territories both in England and the UK. ply titled Docklands), and prestigious multi- The areas that belong to London are divided storey buildings are being constructed in their to internal and external; the latter were at- territories. Besides, the areas are crowded by tached to the city only within the last two cen- tourists and also have many and beautiful turies. The data of 2003 shows that there were parks. On the other hand, Lewisham is more 3,109,657 dwellings suitable for living in the a residential area but its separate parts still city, and construction and renovation works retain many advantages of Greenwich. continue. Besides, city development projects Since London is large, its division to areas are being implemented in an attempt to host is conditional; therefore, the dwelling place is the Olympic Games in 2012 in London and it usually defined not by the name of the area was successful. but by a post code (to be precise, its initial About one half of all dwellings in London part). Therefore, this classification, which en- are flats; London areas located in the South ables the collection of more homogeneous data, East are not an exception, and more spacious was used in the analysis of the territories. two-bedroom flats are popular there. Their The areas of South East London for which prices and determining qualitative and quan- we succeeded to collect the most homogeneous titative factors are analysed below. statistic data about the prices of flats are The following areas belong to the South analysed below: East part of London: Bexley, Bromley, Croydon, SE3 - (South East 7) Blackheath, Greenwich, Lambeth, Lewisham and Blackheath Park, Kidbroke; Southwark [11]. SE7 - Charlton; External areas (Bromley, Bexley and SE8 - Depford, St. Johns; Research on the Prices of Flats in the South East London and Vilnius 53 SE10 - Greenwich, Rangers House; palities, thus the state sector has a significant SE12 -Grove Park, Lee, Lee Green; share in the real estate market. SE13 - Lewisham, Hither Green, Ladywell. Average household is slightly more than two The 2001 year data shows that 214 403 persons in these territories, thus the demand people lived in Greenwich and 248 922 for especially large dwellings is limited despite Lewisham [10]. The Royal Statistics Society the fact that more spacious dwellings are es- even provides the indicator of non-white resi- pecially appreciated. Average age of residents dents. They make up 22,89 % of the popula- in the areas is 35, thus it may be assumed tion in Greenwich and 34,08 % in Lewisham. that the analysed areas are not old from the This data shows the multinational aspect on perspective of the age of residents. On the these areas and also the whole London and other hand, the majority of residents are im- the racial distribution in selected living areas migrants who usually rent the dwellings. (see Table 1). Flats and semi-detached houses are the Greenwich is among the greenest areas of dominant types of dwellings in these areas and London; the size of its parks considerably soft- this trend considerably differs from the domi- ens the effect of jams and makes the area at- nation of individual dwellings in the UK. tractive to those who search for a quiet oasis The price for one square metre of the near London City and Canary Wharf where analysed flats is influenced by quantitative (to- many high income residents work. The unem- tal area, storey, etc.) and qualitative (flat con- ployment level is low here, as in England in dition, parking, general communications, noise general. Quite a number of people go to work level, additional spaces, etc.) factors. by public transport (usually underground), es- Flat area is measured by feet in the UK, pecially to the centre. Car parking is even the data on the total area is usually not pro- available near some of underground stations vided (it is usually limited to the measurement for those who came from more distant areas of rooms, corridors, sanitary units, etc.). of London. 50 % of dwellings are occupied by The storey in which the flat is situated their owners, a number are rented; however, must be mentioned because flats which occupy over one quarter of them