Spotting an up-and-coming area is every homeowner’s and property investor’s dream – and for good reason. Property hotspots, if you time your entry well, can result in greater capital growth ahead of the natural house price movements.
But how do you find a town, village or city where prices are about to start increasing?
The answer is, it’s not easy. The trick is to learn to spot the trends enabling you to act quickly and maximise potential growth before everyone else tries to get in on the act. Here we explore some of the possible signs to look out for that may just lead to a property boom:
1. Transport and infrastructure
Transportation and accessibility is one of the biggest factors that draws in buyers and renters of any age. Good transport links automatically add value to a property as people will always pay more for convenience. Look for areas that have plans to improve local transport as this highlights potential regeneration and opportunities for growth.
Research by Zoopla found that, since building works started on the Elizabeth in 2016, properties located along the line are now worth 54% more than the average property in England (and the line doesn’t even open until 2019.) (1)
It’s often a good idea to use a map of train stations, tube lines or bus stops to identify the latest so-called property hotspots, and work back a couple of stops to try to identify where may be next.
2. Independent retailers
Successful independent businesses, like delicatessens, florists, coffee shops and boutiques, suggest a more affluent area where locals are willing to pay more to buy locally.
Research by Lloyds Bank has suggested that living close to a well-known supermarket chain can add an average of £22,000 to the value of a home and even more if that supermarket is a Waitrose with the “Waitrose effect” potentially adding almost £40,000 to property prices. (2)
However, if premium supermarkets, chain coffee shops and high street retailers have recently opened new stores in an area, it is possible that this area has already reached its growth potential.
3. Extensions and home improvements
If a number of properties are undergoing renovations, extensions and improvements, it’s likely that the residents in this area are happy with where they live and/or are willing to invest in their properties. This would indicate that residents wish to stay in the area, and therefore the demand will increase, or they have identified an opportunity to profit from renovations during a buoyant market.
4. Crime statistics
Now that local crime statistics have become far more accessible via property websites such as Zoopla, it’s much easier to identify areas with lowering crime rates. If the crime rates are reducing, this can often be a sign of regeneration and a safer environment will make the area more desirable for buyers. A report in the Economic Journal suggests home buyers could expect to pay 1.7% more for a home in a place where crime is 10% below the London average. (3)
5. Large infrastructure projects
If you can see cranes lining the sky, it could possibly signify growth in the area and the demand for housing is likely to spike as workers seek employment. If the local council is investing in the area, it’s likely to be followed by increased desirability. But remember, large scale development and regeneration projects can also fall through – so it’s important to fully research each development.
6. Young people
Age demographic is a crucial factor in determining the areas which will realise the most growth. Places that have a high population of younger people will inevitably experience house price growth in a relatively short space of time. The majority of these people will be young professionals who will require proximity to local retailers and transport links which will encourage more local business owners to the area.
Consequently, area will undergo regeneration to cater for the younger market and what were less desirable areas will morph into urban hotspots in response to heightened demand from younger people with disposable income.
7. New estate agencies opening
Estate agents move with the market and will have carried out extensive research, including market trends, public transport plans, jobs availability and regeneration plans before making the decision to open a new branch. If there are more than three estate agents in the area, it’s likely to be an area that will experience house price growth in a short space of time.
8. Employment opportunities
If a large employer is looking to move to the area, or an existing employer is recruiting more staff, there’s likely to be increased demand for properties as people which will drive up prices
9. Amenities and….Farmers Markets!
As well as independent retailers, areas that have a good access to a range of amenities, generally within a five mile radius, are likely to become popular places to live. Check proximity to high-performing schools, access to a major motorways or train lines and other conveniences such as doctors surgeries and dentists.
Recent research conducted by Zoopla suggests that properties located close to a popular farmers market could be worth up to 26% more than the average home in the same county. Data shows that living in close proximity to a weekly supply of organic vegetables and artisan bread can come at a price, with properties near some of Britain’s most popular farmers markets valued at £87,180 more on average than those in the wider county area. (4)
10. Days on the Market (DOM)
A slow, steady decrease in DOM is an early sign that an area might be on the verge of up-and-coming status. A decline in the DOM can happen before prices themselves start to rise, so by keeping an eye on the trends, you may just be able to keep one step ahead of other investors.
At Hubb Property Group, we can access high-potential property opportunities first. With our extensive network of property experts, we are regularly given privileged first access to new instructions and off-the-market sales. This allows us to acquire BMV properties, which we then renovate and sell when the market is right, delivering significant returns on investment.
If you’d like to find out about our current investment opportunities, please get in touch – we’d love to hear from you.