Faced with vastly inflated prices in the south, property investors have been looking for bargains in the north recently. But now some areas in the north such as Cheshire, North Yorkshire and hot city centres such as Leeds and Newcastle are catching up rapidly, and may even be declining in relation to their southern counterparts, according to new research by FPDSavills.

Faced with vastly inflated prices in the south, property investors have been looking for bargains in the north recently. But now some areas in the north such as Cheshire, North Yorkshire and hot city centres such as Leeds and Newcastle are catching up rapidly, and may even be declining in relation to their southern counterparts, according to new research by FPDSavills.

According Richard Donnell, head of research at the estate agency, prices in the region are traditionally about two-thirds of those in the south, but have been left behind by the galloping price boom in the south. Now the situation is reverting to normal.

But there are many bargains still to be had in the north, as Donnell recognises: "There are many property hot spots in the north of England that have performed on a par with those in the south over recent years."

And it is these hot spots that visitors to the Property Investor Show North, at Manchester's G-Mex Centre this weekend will want to locate. Donnell points out that the most obvious low-cost areas are cities that have yet to recover from the death of heavy industry such as Hull and Stoke on Trent, where prices are on average a quarter of those in the south.

But this does not help the cautious investor. Prices may be low not because the locations are undiscovered gems but simply because the areas are post-industrial wastelands with little to offer.

It is not hard to understand why investors are often uneasy about regeneration areas. For a start, when the money is actually needed they are slums, often sink estates where the police patrol in squads and you can't see the walls for graffiti. It needs a huge leap of the imagination to envisage the place cleaned up and full of respectable, rent-paying tenants.

The reward, Goldsmith says, is galloping property prices: "Within certain regeneration areas properties are going up at £1,000 a week and don't show any sign of slowing down."

Regeneration areas in Manchester, Liverpool, Barrow, Glasgow and Dundee have all showed such growth, she says. "Even in Leeds, which has become expensive generally, there are real hot spots because of the new transport infrastructure."

A good way of spotting future hot spots is to look along the route of the metro systems that are being built in many cities. "All the stops on tram lines will drastically increase in value, because they are in terribly deprived areas," she advises.

Another good indication of future local booms is a new shopping centre. When touring an area, it is worthwhile looking out for an outbreak of new branches of estate agents - they will be in early. If swanky cappuccino outlets have arrived, you have probably missed the boat, Goldsmith says.

Another big plus for investment in the north is the buoyant lettings market. "The rental population is less mobile up north than it is in the south, so you get fewer voids and less aggravation," she says. Property investors in the north are now looking at satellite towns rather than city centres such as Leeds, Manchester or Newcastle, according to Stuart Law, chief executive of the Property Investors Club, who is also speaking at the Property Investor Show North. "Places such as Huddersfield, Wakefield, Middlesborough or Gateshead are good value and have short commute times to city centres."

But people are not moving into these areas hoping to make a quick buck, Law says. "Investors are taking a five-year view, and a not even looking to make a rental profit. They are quite happy to see the property breaking even on the rental, while looking for capital gains in the long term."

Many satellite towns are also regeneration areas, he says. "The key to success is to find a well-funded regeneration scheme that is already under way, but in an early phase."

A good developer is almost as important as a good location, Law believes. "Are they just cramming as many boxes into the area as they can, or are they spending money on landscaping and features such as lakes and ornamental features like clock towers?" he asks. Such developments are more likely to be popular and show the long term capital gain investors are looking for.

But Law has a very simple rule for investing in the north: "Be very cautious with any property that has a three in front of it - if the price is more than £300 a square foot, the headroom for capital growth will be limited."

The Property Investor Show North is at Manchester's G-Mex centre from 18 - 20 June 2004. See www.propertyinvestor.co.uk for details. Tickets are £7.50.

The Property Investor Show North is not just about the north, of course. Speakers will also be explaining the ins and outs of investing for beginners, how advanced investors can diversify their portfolio, and giving unrivalled insights into future prospects.