Spotting the next property hotspot

Saturday, 6 September 2008 3:21 PM

With the UK property market in the doldrums investors are looking for the next bargain, and aboutproperty.co.uk is here to offer some tips for success.

Opportunities in the domestic market have been moderated by a sharp decline in confidence - with Nationwide reporting prices have fallen 10.5 per cent over the last year.

Mortgage lending is also significantly down on last year, while obtaining a mortgage with suitable fees, loan-to-value rations and interest rates is also becoming increasingly difficult.

As a result buyers have been looking to new and diverse areas to make a purchase.

The key to a successful property investment is identifying opportunities before the mainstream market, making a purchase and watching assets appreciate.

"Do your research," explains Andy Smith, managing director of investment specialist 1st Asset.

"Don't wait to be told that a certain place has seen house price growth, anticipate it.

"Many people invested in Liverpool, this year's European Capital of Culture, long after the city had received the title, been heavily promoted and prices had peaked.

"The key is to think ahead and pre-empt investment opportunities."

Infrastructure is also a major consideration. Improved transport links are essential to identifying the best places to invest, for example.

If travelling times, particularly to a large city, such as London, are going to be cut then people will be looking to move to and rent in these areas, thus bolstering prices.

The high speed rail link through Ebbsfleet will significantly cut journey times from the south-east coast to the capital when domestic services get underway in 2009. The Crossrail scheme is also likely to add value to London.

Anticipating such schemes in developing markets could lead to significant capital appreciation on investments.

"In the current market there are two types of areas which will resist price drops: the super-prime, such as London's Chelsea or Kensington which will always be popular and attract buyers immune to the credit crunch, and places which are experiencing change or receiving investment," continues Mr Smith.

The same applies to areas undergoing regeneration

Local development agencies, such as South East England Development Agency (SEEDA), hold various pieces of information on regeneration projects and business initiatives, as well as new development proposals, housing strategies and key timelines for up and coming events and regeneration works.

Obvious examples include the Olympics and the Thames Gateway regeneration project, but there are many more. Reading local newspapers is also a useful way to find out about planning applications.

Furthermore, when an area is popular, with good transport links and amenities, many people looking to move or rent there will eventually be priced out of the region, and will spill over in to the surrounding area, pushing up its property values.

These places on the periphery then grow in popularity.

By identifying the potential ripple effect early investors can really cash in.

Those who invested in the areas surrounding Maidenhead over the past year due to the Crossrail Bill, for example, have already seen price increases and can expect more when work for the line linking Maidenhead to Shenfield via central London gets underway.

These benefits can only be achieved with an overview of the whole market.

A lot of government departments, councils and development agencies operate separately, with little sharing of information, it can be difficult to get a full overview of the prospects of some areas.

The information is out there, but gaining this overview can be extremely time consuming.

Investors can seek advice from professionals, who will do all this research and use their contacts to advise clients on the best places to invest.

"Although we have seen price falls across the UK, often they are over exaggerated and skewed by a few particular places without strong markets, but this should not scare investors - rather, it is a fantastic opportunity for people to buy now, and see their property increase in value as the market improves, which it will," added Mr Smith.

"We expect property prices in the south-east, for example, to outperform the rest of the UK by five to eight per cent in the next five years.

"Property investment is for the long term, and people that sit out and wait will only see prices rise and their potential profit drop."

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• uk property features