Which supermarket has the best property price premium?

Which supermarket has the best property price premium?

Online estate agency, Tepilo, looks at which UK supermarkets serve up the best property price premiums.

We've written in the past about the importance of good local amenities – in particular the presence of a national supermarket – to prospective buyers. We've also looked at research which states that homes close to a supermarket tend to command a premium.


In the past, we’ve seen reports on the well-known ‘Waitrose effect’ and other research has highlighted the ‘Lidl effect’ – where a budget supermarket chain nearby is a big draw for buyers – and the importance of supermarkets in general, with homes close to a major store seeing an uplift in average prices as a result.


Now Lloyds Bank has carried out new research into the supermarket phenomenon, finding that homes within easy reach of a local supermarket are, on average, worth £21,512 more than nearby areas where a supermarket is less accessible.


Of the major supermarkets, properties in an area with a Waitrose, Marks & Spencer, Sainsbury's and Iceland close at hand are the most likely to command a higher premium in comparison to the overall town average.


Prices close to the upmarket, high-end supermarket brands – Marks & Spencer and Waitrose – witness the highest premiums. The research found that the average price for homes close to a Waitrose is typically £36,480 higher than the wider town average (£429,118 versus £392,939) – a considerable uplift.


As you can see from the high average house prices quoted, however, Waitrose supermarkets tend to appear in affluent towns, cities and villages where prices are already quite high. The appearance of a Waitrose nearby, though, increases the attractiveness (and price) of a home even more.


It's a similar situation for those living close to a Marks & Spencer, with the famously gourmet, high-end brand commanding the second highest price premiums. Properties close to an M & S are valued at an average of £29,992 more than homes located further away.


Sainsbury's, a mid-market, ‘something for everyone’ supermarket with particular appeal to families, also commands a strong premium, with homes near to a store worth over £26,081 more than properties further afield.


Even the discount chain Iceland – the budget frozen food specialist particularly popular among busy mothers – commands a strong premium of £22,767.


Overall, homes within easy reach of the above four supermarket chains are trading at an average premium of 9%, something that will be music to the ears of prospective sellers who happen to own a property close to a Waitrose, Marks & Spencer, Sainsbury's or Iceland.


The highest house price growth, meanwhile, is taking place in areas close to budget supermarkets such as Aldi or Lidl. Popularly known as the discounters, they generally offer a much smaller product range and cheaper goods, with far fewer brands on show than their rivals.


House prices near to an Aldi or Lidl have risen by an average of 11% (£21,400) since 2014, growth matched by Asda and Morrisons – supermarkets that are part of the ‘Big 4’ but are generally seen as more affordable than Sainsbury's or Tesco.


The 11% growth witnessed by Aldi, Lidl, Asda and Morrisons is a faster house price increase than all supermarkets (9%) and slightly higher than for all areas in England and Wales (10%). In postal districts that are home to an Aldi, the average house price has gone up to £198,810 in 2017 from £178,809 in 2014 – a rise of just over £20,000 in three years.


Meanwhile, postcodes with a Lidl have seen house prices increase by £23,722 in the same time period, up from £216,258 to £239,981. In cash terms, though, the Waitrose effect still wins out, with the largest price rises found in postal districts with a Waitrose store – up from £396,104 in 2014 to £429,118 in 2017, an increase of more than £33,000.


As you would expect, the highest average house prices are found in areas with a Waitrose store (£429,118). Waitrose is the most expensive chain and generally attracts an affluent customer base with higher levels of disposable income. The average price in areas with a Waitrose is nearly twice as high as areas with an Aldi store (£198,810).


The most expensive areas after those with a Waitrose are locations with a Marks & Spencer (£350,653) and a Sainsbury's (£314,154).


Homes in areas close to major supermarkets commanding a premium of £22,000 shows just how important carrying out a convenient and easy weekly shop is to buyers. Research suggests it is the most important local amenity, with branded supermarkets having particularly high appeal.


The latest research also reaffirms the power of the Waitrose effect on house prices, with a Waitrose on your doorstep likely to increase the price of your home and the price buyers are willing to pay for it. That said, ‘budget’ stores are keeping pace, and are also increasingly appearing in more affluent areas as shoppers seek to lower their weekly shopping bills.


The research also looked at the places with the highest ‘area to town house price premium’. Ponteland in Northumberland and Chiswick in West London commanded the greatest average prices when compared with the surrounding town or local authority borough average.


In Ponteland, home to a Waitrose, Sainsbury's and Co-Op, the average house price is 104% higher than surrounding areas, while in Chiswick (home to a Waitrose, Sainsbury’s and Marks & Spencer) it's 89%.


In other words, if your home is close to a supermarket – in particular a Waitrose or a Marks & Spencer – your chances of selling for a high price are excellent and you have a ready-made part of your sales strategy already in place.