10 ways to spot the next up-and-coming area

Make sure you know where to make your next property investment

29-10-07, UpMyStreet ©

With some areas experiencing a slowdown or even fall in property prices, investing in property is becoming a more risky business. But there is still money to be made from buy-to-let and property investment. According to Paragon Mortgages, average rental incomes are up nearly seven per cent in the past year.
In a more turbulent property market, investing in a location that is up-and-coming rather than already popular will give you the biggest return on your investment. Here are ten key indicators to identify a soon-to-be desirable area before everyone else does.

1. Desirable neighbouring postcodes
Look for an area that borders an already popular location. Buyer and rental demand for property will usually spill over from highly desirable areas to neighbouring districts, and these areas can become more popular themselves in the long-term through this association.
In particular, look for neighbouring postcodes that have a similar housing stock and roughly the same transport links, neighbourhood demographic and local amenities. A rise in popularity of the less fashionable area should be realised once people see the advantages it shares.

2. Future transport extensions
Good transport links are one of the biggest factors drawing buyers and renters alike to a location, and automatically add a premium to a property's price tag. Look for areas where there are plans to improve local transport - extra rail or underground links, a new bypass or road extensions. Transport plans are publicly available at your local council.
Be sensible when it comes the exact location of your investment. While proximity to transport links is important, buyers and renters will be put off by a busy bypass or noisy train station on their doorstep.

3. New development
Investing in an area about to undergo regeneration is a no-brainer - the biggest return will come from successfully identifying the local areas that will benefit the most, says Pierre Williams, of property investment experts Inside Track:
"Everyone knows that the Thames Gateway is destined for massive growth. But it's a big area. So you must consider which specific locations in it might perform best. The areas adjoining the Olympic site and Ebbsfleet, because of its new high-speed rail link station, should do very well."

4. Emerging student areas
The buy-to-let market is perennially healthy in university towns. Paragon estimate that landlords letting property to students achieve a return 25% greater than other buy-to-let properties, and highlight Middlesbrough, Chester, Huddersfield, Leicester, Hatfield, Ipswich and Canterbury as the areas with the strongest buy-to-let potential, based on student demand and current average prices.
Even better is finding a student location that hasn't been cornered by other investors. Keep an eye out for new university campuses or colleges opening in different parts of town.

5. Modest price growth
It can be tempting to invest in an area with a strong track record of property price growth, but this also means it could have reached the ceiling of its price potential. You'll make a bigger profit investing in an area experiencing average, rather than explosive, growth. With property more reasonably priced, your up-front investment is lower, and there's still the potential for prices to grow if you pick the right location.