Peckham, five years after Damilola. Has anything changed?

The stairwell on Blakes Road where Damilola Taylor lay dying on 27 November 2000, bleeding from a stab wound to the thigh with a broken bottle, is gone now.

Five years after the murder of the 10-year-old Nigerian, so too are the filthy, rundown, high-rise flats that were attached to it. It is all gone - the whole North Peckham Estate symbolically razed.In its place have appeared 2,500 new homes.

But locals say little has changed. The plague of burglaries, intimidation, muggings and stabbings continues, despite Southwark Council tackling the shoddy housing that saw this corner of south-east London become the eighth most-crowded place in the UK.

"My kids sum it up well: nice new houses but the same old shit happening inside them," said Camilla Batmanghelidj, a leading child psychologist who works with emotionally abused and violent youngsters in the area through her Kids Company charity. Many still lived with "extreme, exhausting stress" caused by worrying about their parents, she said. "They live with a high level of violence and a shortage of money."

Damilola's death "really woke people up to lone children on the streets fending for themselves", she added. Despite this, education, social services and mental health services remained under-resourced.

Teenagers recognised her concerns. Lloyd Stephens, 16, said poverty had forced people he knew into crime. "There's a lot of stealing," he said. "If you get mugged and don't give over your stuff you get your face bashed in." Asked what he thought of new sports facilities in Peckham, he said: "I dunno. We just jam, you know, in the street."

Even some of those residents given new homes remain unconvinced. Back on Blakes Road,Mary Borg dismissed the regeneration as lacking substance. "You can change the houses, but you can't change the people," she said. "This is a rough area - what happened to Damilola down the road didn't surprise us. You don't go out at night otherwise gangs trouble you. You worry they'll pull a knife or a gun."

A neighbour, Sylvia Mitchell, said she was mugged two weeks ago on one of the new roads. "I lived on North Peckham Estate before they knocked it down and I'd rather go back to that," she said. "There was a community and, if something bad happened, people came to help."

An immigrant resident, who asked not to be named, said she saw children as young as seven breaking windows in the disused factory late at night. "By the time they are teenagers that will not be enough for them," she said. "They will be mugging us. I've lived here 20 years and have seen it happen." She conceded that crime on her street had fallen since the rebuilding.

Others were less pessimistic. At Damilola's school, Oliver Goldsmith Primary, there will be a memorial assembly for their former pupil on Monday. The headteacher, Mark Parksons, said the biggest change in the past five years was pupils' willingness to talk to teachers about problems outside school. "That was the problem with Damilola," he said. "He didn't tell us."

Mr Parsons said that the presence of police and pedestrian wardens to help children travel safely to school - heavy after Damilola's murder - had tailed off. Parents had become more supportive though, and there were fewer challenging refugee children from countries such as Sierra Leone, Somalia and Bosnia.

"The biggest problem is that this is a very mobile area with a high turnover of residents who come and go, making it difficult for kids to settle," said Mr Parsons. "Remember: this is Peckham and Camberwell, not Kensington." The Peckham Academy, which offers specialisms in business or performing arts, was raising education standards in Southwark, he added.

Those who knew Peckham before the £275m investment began in 1994 - the death of Damilola was the catalyst for faster change, rather than the origin - agree that, over a tiny area, the transformation is impressive. There are several community treasures, foremost among them an award-winning library designed by Will Alsop, which is packed throughout the day. There is a new leisure centre and a youth centre, the Damilola Taylor Centre, funded to provide sports activities.

Peckham has also been reborn as something of a creative hub, attracting artists such as Antony Gormley, who has designed some of its street art.

Low rents and its proximity to Goldsmith College and Camberwell College of Arts recently saw it named by a panel of experts as a "hot spot" of British culture.

There is criticism of the project once you go to East Peckham, outside the regeneration zone. Gordon Fox, a retired postman, said his part of town had seen none of the benefits. "I go home at 4pm and don't come out until the next morning, it's not safe," he said. "But credit to the council, the library is beautiful. I do my crossword there."

Despite cynicism about the regeneration's chances of success, the council insists it would be churlish to scoff at its efforts. It promises to attract new businesses and homeowners to breathe energy into an area which has suffocated with little of either for 50 years, and says that crime is slightly down. But the real challenge is yet to come.

In two years' time, government funding runs out and the council has to absorb the substantial costs of sustaining regeneration into its existing budget. "We have a series of problems, not the least being the ability of the council to find money from an already stretched council tax pot," said Russell Proffitt, head of regeneration at Southwark. The danger will be that if the funding does dry up, the project will fall far short of its aims.

Three teenagers are due to face trial for Damilola's murder in January next year at the Old Bailey. Hassan Jihad, 19, from Peckham, and two youths aged 16 and 17, also from south London, who cannot be named for legal reasons, were charged with murder in January this year.