Prime locations in 2009

Unless one has been living in outer space for the past twelve months, it has been undeniably one of the worst years for the property industry since records began. But as the bells ring in the New Year, all is not as pessimistic as the doom-mongers are suggesting - for in every market, even during economic recessions, there will always be winners as well as losers. We take a look at the UK's predicted prime locations for 2009; tiny pockets of hope in a property market beset with somewhat unwarranted negative press.

prime locations in 2009 According to Knight Frank's residential market forecast for 2009, although there is still a degree of caution, sales volumes are predicted to hit their low point at the end of 2008 and recover to reach 60% of their long run average by the second half of the year. This should, according to Knight Frank, present bargain opportunities for cash rich and equity buyers. Liam Bailey, head of their residential research team explains: "The winners in this market will be anyone with equity who can buy over the next six months. Those requiring significant finance will be unlikely to be quick enough on their feet. Vulture funds and cash-rich individuals will be the first to benefit. It may be hard to stomach but opportunistic buyers are looking for distressed property sellers."

A more pragmatic view is offered by NAEA Chief Executive Peter Bolton-Smith: "2009 will throw up bargains but buyers should still be very cautious. Areas of over-supply such as Leeds, Manchester and the Cardiff Bay area may present as many white elephants as good deals - and buyers will need to do meticulous research to avoid getting stung."

It is clear that people are now looking at property more as something to live in rather than a commodity to quickly trade. As far as geographic 'hotspots' are concerned, 2009 is such an unpredictable market to accurately forecast. Bolton-Smith explains: 'The best profit potential may not necessarily be found in one single geographic location, but may be as specific as an individual street or type of property. There are and will continue to be small pockets of activity which will yield success - but research is critical. The winners in 2009 will either be first-time buyers with a good deposit or investors, both of whom are looking at property worth approximately 20% less than the same time last year.'

From an investor's perspective, successful property tycoon Raj Shastri advises buyers not to be too worried about the future: "If you are buying to live in as opposed to purely investing, remember that it is, after all, a home. I wouldn't worry too much if the value goes down in 2009. As with all things in life, the market will turn, the price will recover and will eventually increase.

"People under 35 probably haven't experienced a recession before and may think it's the end of the world. It's not, and property will go up in value in the medium to long term."

Seaside locations

tenbyTenby

The first thing that strikes you as you visit South Wales's most treasured jewel, Tenby, is its multicoloured façades - houses painted in shades of pastel blue, pillar box red and vivid yellow, all tumbling down towards the ancient hook-shaped harbour. A timeless and eternally popular holiday spot on the Pembrokeshire coast, Tenby bucked the trend in 2008 seeing prices fall by just 6% as opposed to 10% for the rest of the UK, according to Knight Frank.

In the summer, the town buzzes with tourists and as a result, seasonal employment is relatively healthy. The area is ideal for families as well as second homers with good schools, healthcare and shopping. Properties range from one bedroom flats costing around £70,000 to nearly £1 million for a six-bedroom period house overlooking the sea.

Example property: Two bedroom furnished holiday bungalow in Tenby, £48,500

hastingsHastings

Noted for its famous battle in 1066, the Sussex coastal resort of Hastings deteriorated to near ruin in the mid 1990s but this has all changed now. Within easy commute of its more cosmopolitan neighbour Brighton, Hastings is undergoing a renaissance with £400 million earmarked for regeneration projects over the next decade. With steady population growth, excellent schooling and transport links into London and growing tourism, the area offers potential for long term capital growth for singles, families and investors, for whom there is a diverse choice of property available.

The average selling price of property is £168,112 with one bed flats costing around £100,000 to £350,000 for a five bed family home. Interestingly, there has only been a 1.6% decrease in property values since last year, so Hastings definitely has profit potential for the future if the buyer selects stock carefully.

Example property: Five bedroom three storey period home in Hasting town centre, £120,000

seahamSeaham

More noted for its association with the films Billy Elliot and Atonement, the County Durham coastal town of Seaham was saddled for years with the reputation of being nothing more than an uninspiring coal mining area. However, the past five years have seen Seaham record the biggest price rise amongst all the seaside towns surveyed with a 193% upward shift in average prices.

Despite this meteoric rise, house prices still remain relatively modest at an average £126,348. Regeneration is ongoing and in addition to the £18m shopping complex opened at Byron Place and plans to turn the area into the north's equivalent of Pinewood Studios, Seaham could soon see its name up in lightsas being one of the property stars of 2009.

Example property: Two bedroom mid terraced house in town centre, £10,000 (ten thousand pounds!)

City locations

Currently, cities such as Manchester, Leeds and Cardiff have a large number of vacant properties sitting idle caused by rapid overdevelopment during the boom years. Whilst shrewd investors are able to source bargains from frantic buy to letters desperate to offload surplus stock, experts say that if one looks further afield in places offering better growth potential such as Newcastle where prices have dropped markedly in the past year, there is more chance of making money. For example, local agents in Newcastle have been reporting unsold properties marketed unsuccessfully last year coming back onto the market up to 20% lower than their original selling prices.

Newcastle is also seeing positive rental activity; landlords enjoying up to 20% increases in rental income over the past 12 months in some areas, making it an ideal base for singles to families as well as speculative buy-to-let investors.

londonLondon

London provides such diversity of property that it generally recovers from negative growth cycles first out of all the major cities in the UK. As such, it is always a good bet for long-term capital growth. The Olympic site at Stratford has seen excellent price increases up to 23% in recent years, although this has stabilised with the downturn. Experts are now looking to commutable areas just outside the immediate site such as Leyton, Hackney and West Ham as the next beneficiaries of a market upturn.

For those who can afford to invest in prime areas, experts are looking at the Knightsbridge, Kensington and Chelsea areas where flat 'reconversion' is taking place. Buyers are now seeing the potential of taking on old, previously converted flats within classic Victorian buildings and restoring them back to family houses. These are proving much more saleable to exclusive foreign market investors seeking original, family-sized property in prestigious locations.

Islington is an area with potential being pinpointed by Hamptons International. Property prices in Islington were hit hard in 2008 but now, particularly with its proximity to the regeneration going on around King's Cross, the area is predicted to recover more strongly. Two further city areas highlighted by Hamptons in their 2009 market report as having investor potential are Paddington and Clapham.

Example: One bedroom second floor flat situated in an internal courtyard Grade II listed historical building, £174,500

welsh locationsWelsh locations

Aside from Tenby as mentioned above, areas such as Newport, Cardiff and Swansea have high numbers of lower demographic housing which, due to the slowdown have hit rock bottom pricing levels. For example, the average cost of a home in Newport is £156,515 and offers excellent capital growth considering the planned investment in regional regeneration.

Take the £200 million Friar's Walk retail scheme as a prime example, a four-hectare site bringing thousands of jobs as well as major retailers into the Newport area. There are also further regeneration plans for the railway station, the old town dock and the University campus, making Newport a beacon of enterprise which it is hoped will be reflected in higher property prices in the next few years.

Example: Three bedroom terraced property ideal for first time buyer or buy to let investor - auction guide price £30,000

rural locationsRural locations

Until recently, rural property prices had seemed immune from the effects of the downturn. However, the value of homes in some rural areas from cottages to country mansions has fallen by as much as 7.9% in the space of a year. With fewer people in the market looking for a second home, rural property owners are now finding their homes difficult to shift, which is opening up room for bargain hunters; some of the cheapest rural property being situated in the counties of Lincolnshire and Cambridgeshire.

Investment experts also predict opportunities opening up in the Home Counties, where a lot of the now redundant City and banking workers live. Struggling to find jobs to match their former big city salaries, top end homes are now coming onto the market between 20% and 40% lower than market value to quickly realise equity for cash-strapped executives urgently needing to downsize.

The Hamptons International Market Report for 2009 suggests prime areas worth considering as Windsor, with its excellent commuter links into London, Bath with its good supply of quality housing stock - and Oxford with a stable student base which will, according to Hamptons, offer 'great returns' and 'reliable and robust markets.'

Example: Two bedroom purpose built flat in Kennington, Oxford - Auction Guide Price £100,000

scottish locationsScottish locations

The £1.2 billion Glasgow Harbour is a world-class regeneration project spearheading the revitalisation of this famous city. The first phase of residential homes has been built with more to come on stream. Future plans include further contemporary residential housing, more than 1 million square feet of commercial development, plus retail and leisure parks.

Multimillionaire property tycoon Raj Shastri believes that Glasgow offers excellent investment potential for buyers. He says: "With the infrastructure surrounding the 2014 Commonwealth Games, the Glasgow housing market is now extremely affordable, throwing up plenty of bargains. If you are looking to buy property, haggle hard for a discount (I am currently achieving 25-30% off of current valuations). You should also find out why the vendor is selling, how long the property has been on the market and what their position is. Knowing the whole picture will allow you to gauge where to pitch your offer."

Example: One-bedroom blonde sandstone ground-floor flat in Glasgow, £62,950

  • By Barry Cashin
    31 December 2008
"People under 35 probably haven't experienced a recession before and may think it's the end of the world. It's not, and property will go up in value in the medium to long term."