Home buyers go further afield to beat city prices

Home buyers go further afield to beat city prices

Up-and-coming rural areas and small towns are being targeted by a new breed of young investor eager to get a foot on the property ladder.

Young people who find themselves priced out of the market in big cities are looking to areas such as West Yorkshire, Lancashire and Kent to make an investment.

The new trend has been dubbed 'mouseholding' on account of buying in rural areas. Buyers invest in a small or modest property in cheaper areas where they are likely to see a capital growth on their purchase and use the profits to increase their purchasing power.

Chris Neil, an associate at Knight Frank estate agent in Manchester, said he had noticed an increase in the number of young investors in the past six months. 'I'm amazed at the number of young people investing in property,' he said. He said that he was seeing an equal split between young professionals and traditionally older buy-to-let investors.

Stephanie Would, 19, an estate agent, is purchasing a second property to let. 'I've always thought that buying property early was a good stepping stone. Semi-rural areas like Morley and Pudsey are good for investment and letting because they are close to Leeds and Bradford, which is undergoing a huge redevelopment programme.' Would hopes to use the profits from the sale of the properties to buy her dream home.

Kirstie Allsopp, a presenter on Channel 4's Location, Location, Location, said: 'Mouseholding is the perfect solution for young.....continued below

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people who can't afford a house in the location or size that they desire. Taking this approach is a good way for young people to get onto the property ladder because if they invest in an area where house prices are outperforming those in urban areas they stand to make a good return on their investment in the long term."

The average house price in the north of England in the first quarter of 2004 was £68,334 with the average recorded income of borrowers stated as £23,146. In London the average house price was £193,764 and the average first-time buyer earned £43,429.

Kirsten Hyatt, 24, a television producer from London, bought a property in the Shawlands area of Glasgow earlier this year. 'I'd been interested in buying a property since I was a student, but I had never been that into the idea of being tied down to one place,' she said.

'I decided to buy a property to let it out and a friend who was also keen on investing agreed to split the costs and responsibility with me.' Hyatt aims to use the money made from the Glasgow property to buy in London.

According to anecdotal evidence from the Association of Residential Letting Agents, young investors take an intelligent approach to purchasing property. They typically go for commuter suburbs or towns with high levels of economic activity.

Yet many within the industry argue that investing in buy-to-let property is not a fail-safe option. Nigel Evans, a research analyst at London Residential Research, said that young people should be wary of the returns from buy-to-let. 'Investing in places such as student towns may seem like a good idea, but it's important to bear in mind that during the academic year there are void periods in which you may not be getting any rent,' he said.

'The key to mouseholding is finding a place where property prices haven't quite hit the roof but are likely to, because getting maximum capital gains from the investment is essential.'