A property hotspot is an area where, for whatever reason, property prices are increasing much more than the national average. These price increases are normally attributable to a specific set of circumstances and tend to be for a limited period. They should not be confused with a countrywide property boom where all property prices are subject to increases.

Property developers are constantly on the lookout for the next property hotspot which will give them a quick return on their investment. They will buy land for development or existing properties for redevelopment with the expectation that the value of their land or properties will quickly increase. Those looking to build a portfolio of buy-to-let properties will also invest in a property hotspot on the basis that whatever prompted the area to become a property hotspot will also attract tenants into the area.

What are the main criteria which will see an area that has previously only seen modest price increases and has suddenly caught the eye of investors?

Urban regeneration plans

Local plans to redevelop an area will see prices in that area rise steeply as old property is either replaced or refurbished. The area will take on a whole new character and will attract a different clientele for the available property as it comes back on to the market. Islington Council’s Finsbury Park regeneration project is a prime example where hundreds of new houses were built in the area and were linked by new roads to a newly redesigned Finsbury Park station. This saw the area totally changed in character and saw big increases in the prices of property.

Developers giving old buildings a new lease of life

The Gorbals area of Glasgow had long been home to large numbers of old, red sandstone tenement buildings, many with shared bathrooms. The area’s reputation had suffered because of the deprivation and high crime rate associated with these areas until the developers moved in. Over a period of time, new houses were built but the biggest change to the area was in the existing housing stock. The sandstone facades were all blasted clean and the homes inside were remodelled to form modern, well finished apartments and the whole area was landscaped. The once outdated, shabby tenement flats were given a new lease of life and the prices in the area soared. Permitted development rights also make it easier for developers to convert existing office blocks into flats which do much more for the appearance of an area than empty offices.

New transport infrastructure projects

New rail links or road building projects will see house prices in an area increase due to the improved commuter links. Projects like HS2 would have created new property hotspots along the route, particularly close to any new stations. These improved transport links make for easier travel both into and out of an area, which means that not only is it easier to commute from but is also easier to commute to. This makes creating new jobs in the area by building new business parks, offices, shops and retail parks a more attractive proposition for investors.

Education

It has been widely documented that school catchment areas have a substantial impact on property prices. A school with an excellent or improving OFSTED rating will increase prices in an area, with property prices near the best performing schools up to 25% higher than in other areas.

Hospitals and health facilities

Good medical care is important and as with schools, can have a positive impact on property prices. Hospitals also bring jobs and in the case of the NHS, bring renters which stimulates the buy-to-let market in the area.

New business and retail parks

Both of these bring jobs and new people into an area which increases the demand on the housing market in turn stimulating the property prices. It is therefore wise to look out for areas where these are being planned.

Shops and supermarkets

It has long been recognised that house prices are higher when an area has a healthy supply of quality shops and supermarkets. It has been reported that in post codes where Waitrose has opened a store, property prices have shown a marked and noticeable increase. Quality coffee shops such as Costa, Starbucks or Café Nero are also attracted to up and coming areas.

When looking for a property hotspot, look further than statistics. Go to any number of property related websites and you will find that very few of them can agree as to where the UK’s number one property hotspot is. Some suggest the South coast, others cite a suburb of Newcastle while cities such as Birmingham or Manchester fit the bill for others. This maybe because they are looking at different criteria generating different statistics in making their judgements.

As with all of these market judgements it is best to do your own homework, look for areas which are showing the above characteristics. Talk to local estate agents and other people involved in the property market locally. Search some of the websites which list the selling prices of property in a street over a period of time and compare the prices and work out the trends for yourself.

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