Property: The street smell of success
Spotting the next trendy area before it's trendy is a risky business - but it can be very rewarding.
Saturday 03 April 1999
Clerkenwell, an old area of London between the City and the West End where prices rose 30 per cent in the 12 months from spring 1996 and by a further 20 per cent in the 12 months after, is a prime example of the hotspot phenomenon.
"The market in Clerkenwell was very fragmented at that time, with a dearth of residential stock," says Philip Jackson, of Stirling Ackroyd. A classic case of increasing demand meeting fixed supply, the result was predictable. "A wise buyer at that time would have seen Clerkenwell as being good value, compared to Islington and Bloomsbury."
The experience of Clerkenwell suggests that the dynamics related more to meeting new tastes among buyers. "A major structural change was going on in the property market. Buyers were losing their inhibitions about city-centre living. Many successful developments were conversions from factories, old print works or warehouses; it was very much the idea of selling a lifestyle."
It was - and is - a phenomenon of a different set of priorities being brought to the market, says Ben Smith, of Halifax Property Services. "Many cities are witnessing the same shift, for example Leeds with the Riverside warehouse development, where centrality is a big asset and traditional factors such as good schools are, for this market, irrelevant. One positive signal to buyers is the presence of investors, who aim, after all, to make a profit."
Breaking new ground is not for the nervy. "The precariousness of the initial `will it/won't it' stage can frighten many people off. Just one development can spark of an area - or not - so it can be highly speculative," says Harry Hill, of Hambro Countrywide.
"The first people who signed contracts on the recent wharfside developments in central Birmingham were taking a big risk. As it happens it has gone like a firecracker, but if things had gone wrong buyers could very have found themselves next door to those being rehoused by the council. At the start it is strictly for the brave."
"The first wave of buyers in Clerkenwell were quite different people in terms of being more prepared to take a risk", confirms Phillip Jackson, "particularly since much of the infrastructure development came later. As the development looked more assured and infrastructure was put in place, the investment was seen as less risky, and friends and colleagues were making a go of it. The late starters had to come in at a higher price, of course."
The more sedate family home sector of the property market, where solid neighbourhoods, schools and access to transport links are the overriding concerns of buyers, seems light years away from the frenetic activity of city centre developments.
Yet in its own way it too has been evolving, and those areas that can meet the varied demands and priorities of this sector can find themselves with a distinct advantage.
"This year 16 per cent of private sector pupils are boarders. The proportion was a third just a decade ago. It has had an inevitable effect on the prime housing market," says Knight Frank's Rupert Sweeting.
Meanwhile pupils in day private schools have risen by some 15 to 17 per cent. "Parents are recognising that many less expensive and lesser known schools are getting results just as good as those achieved by the public schools.
"The changes going on in choices about schooling have made their effects felt on the structure of the housing market, and in some cases those effects have been startling.
"Most of the houses in the catchment area of one particular school in west Colchester that has excellent results are former council property," says Claire Hurst, of Bairstow Eves. "However that stock is now 95-99 per cent privately owned, predominantly by middle-class families. It can mean 15 per cent premiums on a three-bedroom house inside the school catchment area."
Keen spotters of future shifts in the market may want to take note of another trend. "Oxford has always been extremely popular for the variety of schools available," says Camilla Lindsay, also of Knight Frank. "But we have started seeing a trend of parents moving to the centre of Oxford so that their children can walk to school." If that takes off, then perhaps a perusal of the school league tables and the purchase of a pedometer could be the most profitable way to spend this weekend.
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