In fact, the ripple effect is responsible for many areas, particularly around London, going up in price.
But did you know that there are ways to work this phenomenon to your advantage? One of them is using my very own called Ripple Effect Pentagon.
The term 'ripple effect' refers to a wave of rising house prices from a central point of high activity. These areas have the best property investment fundamentals, which keep demand, and prices, high and they ripple out from there.
Obviously, not everyone can afford to buy in these 'best' areas. Research by the National Housing Federation released in February showed that Londoners would need a 266% pay rise to afford to buy a property in the capital.
Moving out along the 'ripple' to where you can afford.
As a result, many investors and homebuyers look to further out to buy. An example is that London Zone 1 and 2 have the best fundamentals, that's obvious, they are the most expensive and closest to central, including all the transport, schools, everything. Once demand and prices get too high in these areas, then people buy in London Zone 3,4 and 5, and then commuter towns and finally to Major cities with universities and Major towns. This is the ripple effect in a nutshell.
The ripple effect pentagon can be a useful tool in deciding where to place your money, and we recommend these five areas as they offer everything that you need in order to maximize your returns so you can build the portfolio that you want.
So why have we chosen these areas?
We focus on major towns with a population over 100,000 as we are looking for vibrant communities where rentals are easy to achieve and there's access to good fundamentals.
We focus on Major cities with universities, as universities and their students are great from an investor point of view as they tend to take out a lot of the lower end stock, which helps drive demand on the higher end. This is exactly where you want to be as an investor. If you are investing in specialist assets to let particularly to students, it's particularly important to have a well planned property investment strategy and that you've done your research before investing to ensure you build your portfolio in the most efficient and safe way possible.
We focus on Commuter towns which are also great for property investment as they see high demand from City workers and other commuting professionals who can’t afford to buy in London. We focus on areas that are 90 minutes away from London or less.
Why we stay clear of smaller towns and cities.
We avoid smaller areas due to the higher risk of something happening that can affect house and rental prices. For example, a small town may lose a major employer or floods could affect the area.
Hotspots are 3 to 5 years into the future... Not Todays hotspots.
We always think ahead by investing in an area three to five years before it becomes a property hotspot. This is because we want to be able to ride that wave before it’s too late. This is where the ripple effect pentagon is a great tool to have handy.
For example, if prices in London Zone 1 and 2 have shot up by 200% in recent time, it’s unlikely that this level of growth will continue for the next few years when you are looking to get returns off your investment. In this case, it would be advisable to instead put your money into a development in the next affordable area with the best property investment fundamentals where prices haven’t gone up too much but are likely to increase in the near future.
Even if you can’t afford an area today, there’s nothing to say you won’t in the future. Buying in a commuter town or a major town with a university can generate enough money for you to eventually be able to afford a property in London Zone 3, 4 and 5 or London Zone 1 and 2.
It’s important to be flexible as an investor unless you want to create an individual plan and strategy and focus on one or two areas. Even then, it’s important to understand the ripple effect and have a strategy that meets the current market.
Once you’ve decided, based on the ripple effect and with the help of the pentagon, what type of community to buy in, it’s time to narrow it down further by taking a look at specific areas and developers by getting a hold of the Area Investment Guides that apply to that specific town or city.
Questions? The team is ready and waiting to give you help where you need it. Give our Property Consultants a call on +44 (0)207 923 6100.
Invest without any stress
I am constantly busy with far too many priorities fighting for my attention. I came across Gladfish Property Investment by accident and its been a really good experience to date. Ryan has provided helpful professional advise that has opened the door for me to invest without any stress. Answering questions patiently and providing a service way beyond my expectations, truly delighted by the amount of handholding I have had to date. Cannot recommend them enough, the company overall for their flexibility and going the extra mile! A real surprise
Very satisfied with service
Ritesh and Caroline assisted me on my purchase of an apartment in London. Very personalised service and patient to guide me along as a foreign buyer who's not as familiar with the UK rules. Very prompt response and professional advice. Overall satisfied with the service rendered to purchase this property
Make the correct decision
Very helpful and knowledgeable team, specially Ryan who patiently answered my numerous questions helping me make the correct decision.
I have used Ezytrac for the past 5 years and found everyone to be very professional and informative. Caroline Bevis has always done a fantastic job and I would absolutely recommend Ezytrac and all their staff to anyone!
Great interface with developers
As landlords who work abroad, Caroline has been invaluable in keeping up communication with developers on our behalf. Our purchase went smoothly due to her hard work.
Team at Gladfish always go the extra mile for their clients
The team at Gladfish always go the extra mile for their clients. I had a headache with a third party and Ryan Rahnavard supported me throughout. He did most of the chasing for me. Gladfish is a great company headed up by Brett and I hope to be a client for many years to come! Ryan patiently helped me set up my company so that I can buy property under a company structure. There are always highs and lows when you build a portfolio and I feel completely supported by Ryan and the Gladfish team. Thank you all so much for getting me this far! 10 out of 10!
Very responsive and helpful at all times
It has been a pleasure liaising with Holly in relation to a HIU issue affecting a property at Aberfeldy Village E14.
Holly was very responsive and helpful at all times throughout the process for both ourselves as Estate Management and, also with the tenant involved.
I have thoroughly enjoyed the process of starting to build a property portfolio
I’ve thoroughly enjoyed the process of starting to build a property portfolio with Gladfish. James and Ryan have made the process a fun and stress free one and I’m enjoying learning about the industry further as I go. Their advice in other areas, not just ones relative to our investment projects, is very much appreciated and I’m confident in partaking in future projects with them. The email content is very useful and I would highly recommend the company.
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