The process of regeneration and urban renewal is called gentrification. It typically involves commercial and residential property being purchased and refurbished by richer people in an old neglected urban community where prices are originally reasonably low – or lower than other communities nearby.
The following rise in demand for a neighbourhood ups property values and rents. This can bring a major change in the culture of the area, where low-income families and businesses are either driven out or opt to relocate to take advantage of increased prices over time, and a wealthier demographic move in.
Gentrification normally happens in cycles or waves – a basic example would be a neighbourhood that is inexpensive with some nifty old warehouses. When artists relocate there, the neighbourhood suddenly gives off a creative atmosphere, rich people are drawn to it, and over the years they purchase and refurbish property. Bars and cafes spring up, rents increase, dwelling values go up and the upwards cycle continues. We have already seen this happen in Wickham and Maryville.
Critics say that the most common reason the area was cool to start with disappears or wanes and as a result the redevelopment also causes a shift in the social status in the area.
The Advantages and Disadvantages
In general, gentrification advocates and critics basically have different takes on the effects of gentrification. According to critics, gentrification can drive out, more mature, vulnerable and less well-to-do residents of their long-term dwellings, due to rising prices.
On the other hand, the possibility of gentrification is seen as a bonus by the people purchasing in the area, as it could drive up the value of their property.
When gentrification occurs, the appearance of a neighbourhood, including shopping strips can change over time. Like transforming corner shops and old milk bars into hip cafes and live music spots into gastro pubs. Depending on your lifestyle, you will consider these changes positive or negative for the character of a neighbourhood.
So gentrification always attracts both good and bad reviews.
The Effect of Gentrification on your Next Property Purchase
Both investors and homebuyers are generally focused on two things: affordability and the prospect for capital increase over time.
Both of these things can be delivered by gentrification. Thus, the neighbourhoods with a possibility for gentrification are constantly in demand.
However, the test comes in the form of forecasting the next hot location, and you can’t gentrify an already gentrified neighbourhood. So the locations that are set for investment are continually shifting and people are always watching out for the next neighbourhood to capitalise on.
For instance, we are still seeing gentrification happen in Maryville, as more old warehouses are converted into living and back street industrial workshops are converted into retro cafes. An example of gentrification showing its social impact is Newcastle East neighbourhood, which is under major media scrutiny as protestors contend a sell of government owned housing is further spreading gentrification and driving long-term residents out, with affluent buyers bearing down in the area.
So what is your opinion? Is gentrification good or bad? And where do you forecast the next gentrification will happen?