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Gentrification is the process by which neighbourhoods recover from a period of neglect. In gentrification, a community attracts residents who are willing to invest money and effort in renovating properties, and business investment follows. Neighbourhoods that are gentrifying offer rising property values, and they often have an arty and cutting edge reputation and a strong sense of community. They can be wonderful places to live and great places to invest in property. Once a neighbourhood gentrifies, it can cause a domino effect in the surrounding areas.

Neighbourhoods Go Through Cycles

Gentrification is part of a natural cycle that neighbourhoods go through over and over again. New neighbourhoods attract stable wealthy or middle income residents. Then, when the buildings are old enough to need investment in order to stay in top form, the property in the neighbourhood goes down in value. Crime may increase and the quality of the local schools and businesses may suffer. If the neighbourhood has a good location and attractive architecture, creative people and immigrants will start to move in and repair the buildings. They’ll see the innate value in the area and redevelop it, often though intensive DIY. The neighbourhood then becomes edgy and cool, and more conventional people begin to invest serious money into it. Finally, the neighbourhood becomes overpriced and loses its vibrancy, and the cycle starts again.

Property Buyers are Searching for Bargains

Since the banking crisis, mortgage loans have been hard to access without old-style downpayments of 10%, 20% or more, yet property values are still a much higher percentage of average income than they were a generation or two in the past. The immigrants and artists who have traditionally turned struggling neighbourhoods around have been joined by young middle class professionals. Many are buying property in neighbourhoods they may have overlooked ten years ago. They’re investing in buildings that need work and putting pressure on city councils to improve services in formerly neglected areas of European cities.

Communities on the Move

Gentrification can be a great opportunity if you can find a neighbourhood that’s on its way up, not stuck in place or in a downward spiral. Look for evidence of pride and personal investment: imaginative gardens, yards where the litter is regularly cleared away, and evidence of recent effort put into the buildings. Look for active community groups. These days, they usually have a social media presence. Look for unique, interesting and healthy-looking businesses mixed in with practical, low cost shops. Look for properties that are near existing areas of gentrification.

People who take part in the gentrification process should be ready to live in a mixed neighbourhood indefinitely. It’s a mistake to buy property in an area that you don’t love as it is. The fully renovated and more exclusive future you’re hoping for may not fully materialise, but if you’re happy in the neighbourhood now and you stay involved in the community, you’ll always enjoy living there.

Peter Andrews is a mid-thirties property blogger from London, UK. He has a genuine interest in property development and interior design. In his spare time he enjoys cycling, Ken Follett novels and socialising with friends in his favourite pub.