Buying In An Up-And-Coming Area Is A Smart Move If You Time It Right

Property journalist Sharon Dale reveals how to identify the next hotspot.

I know a couple who lived in Hackney in the early 1990s, long before it became popular with well-heeled hipsters.

Back then it was a crime-ridden no-go area, so when their first child came along they sold their five-bedroom town house for £160,000 and headed back north. The same house is now worth over £1.2m.

After a few beers, they get teary at the £1m they lost by not recognising Hackney’s untapped potential and yet the first signs of an emerging hotspot were there.

Artists and musicians had started to move into the area, attracted by cheap rents. They recognised that old warehouses could make great live/work spaces and slowly the East End became cool. It’s now so expensive that creatives can barely afford to rent a room there.
 
The moral is that it can pay to spot the signs of gentrification. Property values in up-and-coming areas usually rise faster than average. However, if your main aim is to make a fast buck, think carefully. 
 
House prices can go down as well as up as the last recession proved. Plus, you must factor in buying and selling costs when you calculate profits. Also remember that in the most deprived areas with high crime rates, gentrification can take years.
 
If you have children to consider, it might be better to buy into a place where change has happened or where it is happening more quickly. 
 

Here are some tips on how to spot the signs of gentrification:

 
The art factor.
 
One of the reasons Hackney became fashionable is because of the high number of artists, makers and musicians who moved there. They gave it a “cool” vibe and property prices began to rise. The same happened in the former industrial mill town of Hebden Bridge, which regularly features on the list of Britain’s coolest places to live.
 
Look on property portals like New Home Finder to see how many sites are under construction.

You can also check out local authority planning applications and permissions. If housing developers are actively buying up land and seeking planning permission to build in an area, then you can bet it has potential.
 
Upmarket food retailers.
 
If middle and upmarket food retailers, such as Sainsbury’s, Booths, Waitrose and M&S Food, start opening in an area served by Lidl, Aldi and Asda, you know it is all set to become middle class.
 
Supermarkets employ specialists to assess an area’s social make-up, amenities and geography to reveal its potential for gentrification. Quite often they employ a “build it and they will come” approach and they are rarely wrong.
 
When good quality coffee shops, bars and restaurants begin to buy into an area, it is almost certainly becoming more affluent. This is known as the “Costa” effect.
 
Transport links.
 
Places that have good rail and road links to major towns and cities i.e. the places where people work, are ripe for gentrification, especially if they have some attractive architecture and green spaces.
 
Selling fast.
 
A sure sign of an up-and-coming area is how quickly properties sell and rent. Falling crime rates and improving schools are also key indicators of an area on the up.
 
Look to the fringes.
 
If you can’t afford your favourite hotspot, then look to the areas around its borders as some may well be warming up. It’s best to do this on a map and then visit the places that appear to have good transport links, schools and amenities. You can learn a lot by walking round and by chatting to the local estate agents. The internet is a vital tool but you can’t beat foot slogging to get a real feel for an area.
 

Publish date: 13/09/2017