Assetz® News - Lessons in geography

Lessons in geography

14th August 2008 |

When it comes to investing in property, there are clearly some who believe that the north is not worth investing in. It's not just that some cities have seen an oversupply of new apartments built. Rather, on a much larger scale, they do not believe the game is worth the candle.

This week, right-leaning thinktank the Policy Exchange produced a report, suggesting that the whole idea of trying to regenerate northern cities whose historic industrial base is now a thing of the past is not viable. Singling out cities such as Sunderland and Liverpool, the body argued instead that the government should undertake a radical change of policy and allow London, Cambridge and Oxford to expand their boundaries, with this increased urban sprawl providing the living space for an army of northerners who would abandon their grim towns to come south and seek their fortune.

London-based authors of the report Dr Tim Leunig, James Swaffield and Dr Oliver Marc Hartwich admitted the call could sound "barmy" to some, a view quickly echoed by Conservative leader David Cameron while he was - coincidentally - touring northern England. The party as a whole also rejected the report, keen as it is to build up electoral support in provincial urban areas. It may be taken from the hostile Tory response that the kind of regeneration projects that could provide spin-offs in terms of opportunities for property investors will continue in the north if the next election brings a change of government.

In any case, the Campaign to Protect Rural England was quick to argue that the south would not be a better place to live anyway if it became so much more crowded, with senior planner Kate Gordon arguing that the destruction of countryside, traffic congestion and the burden on already strained water and sewerage resources would make a disaster of such an undertaking.

So while future governments of whatever hue should ensure both that the south is not overpopulated and the north is not abandoned, those looking for the right property investment may be keen to note that some see the countryside in the home counties is providing it. David Lancaster of Savills' Chelmsford office has noted that while buy-to-let may not be so hot in city centres, out in the Essex countryside - the sort of area that the Policy Exchange might wish to concrete over - demand for detached homes such as cottages and farmhouses for family use is high, while supply is low.

Mr Lancaster stated: "Tenants are crying out for good rented accommodation, particularly family sized farmhouses and cottages in areas of Essex within striking distance of a train to London. But stocks are low and tenants move fast. What we do have on our books is snapped up very quickly." The geographical difference here is that London's hinterland is offering the sort of accommodation for families that new apartments in the capital are not.

For those who are able to obtain such property, it sounds like this may be a very good investment, since a high level of demand is exactly what a landlord needs to prevent lengthy void periods. As ever, investors should seek out areas such as these where demand is high - even without millions of migrating northerners joining the queue.

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