House prices in West Croydon look set to rocket following the announcement of a new London orbital rail line that will stop in the borough.

The Mayor of London Ken Livingstone announced last week the new route - known as the London Overground line - will operate on the North London Railway from November next year and will link to the East London Line which is currently being extended to West Croydon.

Once the East London Line is completed, when it will be known as the East London Railway, and is connected to the North London Railway at Dalston Junction, passengers will be able to travel between West Croydon and Richmond.

The plans - unveiled at City Hall - have been billed as the first step towards an orbital rail link for London and are expected to be in place by 2010, ahead of the 2012 Olympics.

And, according to estate agents in the borough, the move could see house prices shoot up by 25 per cent.

Krishana Bhogadi, office manager of Portland Estate Agents in West Croydon, said: "The London Overground will definitely have an impact on house prices.

"We can clearly see in West Croydon that the announcement about the East London line has already led to new housing developments and plans for new flats.

"Even the houses that are there already, those that are priced at £160,000 will probably go up to £200,000 because of the transportation.

"A boom is needed in the area. East Croydon has already boomed because of its transport and now I think West Croydon will too - especially as it is close to Mayday Hospital, the town centre and has a tram route to Wimbledon."

Residents in West Croydon also spoke of their excitement about the new London Overground line, forecasting an improvement to the area as a whole.

Sarah Johnson who uses West Croydon Station to commute to work said: "I think it's great news although it's going to be a while before it happens. But I do think it will increase house prices and hopefully there will be improvements to the station and London Road to go with it."

Another resident said: "Any new transport is good for Croydon and West Croydon is quite run down so it would be nice to have a focus for the area."

Mayor Ken Livingstone said: "By joining together the North and East London Railways, we will create a new rail artery around the city, serving 20 London boroughs.

"It will be a vital means of increasing capacity on public transport as London's population grows over the next 20 years."