The Property Advisor

Get on the ladder without all the hassle

Up and coming areas

In a buoyant property market, stories proliferate in the media about spotting ‘up and coming’ areas. Buying ahead of the game is a tempting short cut to riches.

Being smart enough to get in before the herd can earn you a small fortune as prices rise at above-average rates. Chelsea, for instance, was once a down at heel quarter inhabited by penniless artists. But areas can also go the other way and rapidly lose value.

But the influx of ‘big money’ into an area isn’t always a good thing. Large numbers of houses in parts of Prime Central London bought by super-rich international investors as assets are left vacant, contributing to a lifeless, sterile local environment whilst doing nothing to address the housing shortage.

The same could be said for predominantly vacant holiday homes in parts of the country like Cornwall and Wales.

Of course, spotting the next big thing is not as easy as the media sometimes suggest. Some long predicted potential hotspots never seem to actually happen, resisting what used to be called ‘gentrification’ (then ‘yuppification’ and now ‘colonisation’).

It tends to be young professionals who are prepared to gamble on a postcode area, rather than young families who are safer sticking to established areas.

The latest property hotspots are often based on plans for infrastructure investment. For example, parts of Dorset and East London have retained a touch of Olympic stardust. But you need to be selective – high speed rail links and major new runways are unlikely to bring much joy to surrounding areas.

Such predictions are at best only an educated guess, and tough market conditions can torpedo ‘growth plans’. However, there does tend to be a ‘ripple effect’ in a rising market, as people who can’t quite afford to live in the best neighbourhood often buy just outside it.

Then it’s only a matter of time before the gastro-pubs and bistros appear, trees are planted and green spaces blossom. Similarly, a major new housing development can affect the balance of a formerly shabby suburb, adding new momentum as fashionable buyers pour in and rediscover an area’s hidden charms.

Herd instinct, egged on by media hyperbole and speculation-fever, is the main driver of property booms and busts, so areas can change one way or the other surprisingly swiftly.

Fringe areas

In a depressed market ‘up and coming’ areas suddenly become known as ‘fringe areas’, and there is a tendency for values to drop quicker than in better-quality, well-established postcodes. But then choosing pretty much any property means gambling big sums of money on how the market will view the area in future.

So what can push a formerly buoyant locality into reverse gear?

An area is a function of the population who choose to live there, and their spending power. If a major local employer folds, local shops may close as spending is reduced, or a new out of town superstore may suck away local business with devastating consequences.

Fashionable areas may suddenly become terminally uncool. Even depressing new monolithic architecture can play a part in the downward spiral. Some areas have started to decline when problem tenants have been moved in, or perhaps a mini crime wave gets out of hand.

Eventually, if enough local residents react to persistent noise and disturbance by selling up, a ‘down and going’ momentum can develop where more owners move away, increasing the supply of properties on the market. This causes prices to fall, making them more attractive to social landlords, who buy up more properties.

Conventional wisdom has it that owning a less good property in a nice location is better than owning the best property in a naff area. But you have to be careful when following this advice. An area may be delightful, but living in the wrong house can drive you mad.

Too many kids crammed into too few bedrooms while you try to work from home is a recipe for trouble. To get the balance right, it might be better to settle for a reasonable location with affordable property, perhaps one with potential for a loft conversion. You shouldn’t have to live in a mugger’s paradise to buy a nice house.

True story

Duncan and Helen fell in love with a handsome five-bedroom Georgian semi-detached house in an ‘undiscovered’ part of Saint Paul’s, Bristol. It had previously been let as an HMO (‘house in multiple occupation’) and had great potential.

But as soon as they moved in, they noticed a posse of local youths congregated most evenings on their front garden wall, drinking and smoking until late.

The local school was dire and there were no other children locally for their kids to play with. After a couple of weeks, Duncan’s car was deliberately scratched. One day when they were out at work there was a break-in, and the police were not too optimistic about catching the criminals.

Ultimately, as the stress began to affect their relationship, it seemed that the best course of action was to sell up, even at a loss.

Starting your search

It has never been easier to search for property. The estate agents’ website have a virtual online monopoly, claiming that as many as 90 per cent of estate agents list their offerings with them. But there are several other sites such as etc that are also worth checking.

It’s very easy to overlook the fact that a significant number of properties aren’t sold conventionally through estate agents. It is often simpler and easier to buy a newly built property, and some developers prefer to deal direct with the public.

If you’re looking at the other end of the spectrum, for less mainstream properties – such as those in need of renovation or for investment – buying at auction can be an excellent alternative. But perhaps the strongest trend is for an increasing number of home owners to ‘cut out the middleman’ and sell privately.

But regardless of where you search, after you’ve been house-hunting for a while a strange thing seems to happen. The property that your heart becomes set on, the one that you really want, always seems to be priced tantalisingly above your absolute maximum budget.

It’s out of reach and financially suicidal. But you still desperately want it.