The “next door effect” has been felt in London for a number of years. The term is used in reference to the fact that the areas in close proximity to prime markets can see rising prices because of their neighbours. This occurs as people look for more cost effective opportunities whilst still being close to the luxuries offered in prestigious locations. It can also be a response to a lack of supply.
Although the effect is not new, it has been occurring at a much faster rate than ever before over recent years. This reflects the level of demand for properties in London. It is also a reliable indication that buyers and investors are looking much further than they did previously for opportunities, whether through choice or because of the price in traditional prime areas.
There are several notable examples of the “next door effect” to keep in mind. Hampstead and the Hampstead Garden Suburb both found their average property prices exceeding £1 million this year. The increase in value influenced nearby Highgate, taking average prices over seven figures in that area too. Belsize Park saw an even bigger rise in their average values because of rises in Primrose Hill, Abbey Road and Regent’s Park respectively.
The effect is also felt at lower levels too. West Hampstead and St. John’s Wood are both wealthy areas. Kilburn is located in close proximity to both but lagged behind in terms of value. Rises this year saw its average house price rise into the £500,000 to £750,000 bracket for the first time though.
If you are looking for a property that will offer the potential for great returns in the future you need to look beyond the immediate location. This is important but you should also take a look at how neighbouring areas are performing to see if you will find a knock on increase in values. We specialise in helping our clients make the right choices when it comes to property investment in Brent and throughout the rest of London, and can provide the advice and support you need to invest in the right areas.