Property price premium caused by 'the Aldi effect'

Posted 20 September 2016 by Ben Salisbury

The rise of discount supermarkets means house prices rise by an extra £5,000 within months of a new Aldi store opening in an area according to new research

The rise of discount supermarkets has put a bomb under the established ‘big four’ supermarkets, Tesco, Asda, Sainsbury’s and Morrisons, forcing them to focus even more strongly on prices and value for money to try and retain their market share.

The proximity of decent supermarkets to the location of a property has an effect on house prices, in a similar way to how close decent transport infrastructure and schools are to a home. Research shows that 32% of UK homeowners choose a home based on how close it is to local shops and amenities.

But what impact on the value of a property does the proximity to an Aldi store have?

New research from conveyancing firm My Home Move found that local property values increase by £5,000 within weeks of a new Aldi store opening, compared to the national average.

My Home Move compared the average house prices in the three months before a new Aldi store opened to the three months after and found that 10 of the 11 stores saw increases and excluding one town, which saw a massive increase of 133%, the average increase of the remaining nine was £10,000, compared to the average increase in house prices nationally over the same period of £4,903.

Aldi is a growing company with plans to open 83 new stores in 2016, so this impact is likely to be felt in many locations across the UK. Of the eleven stores that opened between February and April, nearly all locations saw an increase in property values, with prices in Chipping Norton, the then constituency of former PM, David Cameron, rocketing by 133%.

Doug Crawford, CEO of My Home Move says: “Our own research has shown that a third of home movers chose their new property based on its proximity to shops and local amenities – and as such we are not surprised that the recent popularity of Aldi, with its cheaper lines and award-winning products, has had a positive effect on the value of local homes.

“A few years ago people were talking about the Waitrose effect, but today it seems homebuyers are choosing to take the ‘swap-and-save challenge’ to heart, as locations such as South Ruislip, Billingham and Poynton have increased in popularity.

“The only exception in our research was Reading, where prices have dropped – but with three stores within a two-mile radius of the city centre it maybe that consumer demand has now been met.”

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