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.
Thank you Caroline for assisting me to complete my Manchester property smoothly in Aug 2020 with great follow up and follow through to ensure completion on time. Caroline even assisted me despite her holiday. Keep up the great work.
Thank you Philippa for looking after my portfolio during COVID 19. There were so many things that happened and Phillippa handled everything smoothly.
You guys are a great partner in my property investment journey.
Wonderful support and service
Great team and special thanks to Caroline! Communication and support was seamless throughout process. Credit to the Ezytrac team. Thank you!
professional and efficient
I have now dealt with Gladfish on 2 occasions, and both times they were extremely professional and efficient. Highly recommend.
Prioritises customer satisfaction
Gladfish prides itself as a company that prioritizes customer satisfaction. The team totally embodies this principle. Completely professional in their manner, open to and approachable for discussion and always available should any questions arise. A perfect example of why Gladfish has the great reputation it does.
Guided me through the whole process
Living in Singapore, I was not close enough to the London property market to understand the market sentiment. The Gladfish team were able to guide me through the whole process. I am now the proud owner of London property and look forward to working with them again on future investments
Far less stressful to be guided
Before we came into contact with Gladfish we already owned three properties in addition to our own home. We have learned that we were not working to any sort of plan but were hoping for the best and working through problems as they arose. Since working with Gladfish, we have now bought two buy-to-let properties with them. Importantly, we know where the money is coming from and where it is going to in advance. We find it far less stressful to be guided by the team that Brett has. My wife Fiona often remarks "if only we had found Gladfish sooner."
Smooth and seamless process
This was my first experience buying an off-plan property and that too as an ex-pat. The whole process seemed very daunting and confusing however I must acknowledge that the Ezytrac team and in particular Caroline Bevis made it as simple as possible. Caroline was absolutely professional in the way she handled the whole process from initial deposit through to completion. She kept me fully updated and remained very responsive to each and every query that I had. I have no hesitation in recommending Caroline and the Ezytrac team to anyone looking to purchase a property in the UK and will surely be using them for my future purchases.
Scepticism gave way to complete satisfaction
Initial scepticism gave way to complete satisfaction. No hype, no pressure - just informed facts - presented clearly. Very professional company.
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