Arty Peckham has become so well connected

From December 2012, once-humble Peckham will gain a direct link to the Docklands, thanks to the opening of a new Overground spur. Peckham Rye, a Victorian Grade II-listed station, is on the new "Ginger line" extension from Surrey Quays to Clapham Junction and will become within a 60-minute commute of two million jobs in the capital. The station is undergoing a £10 million facelift that will include a new square and shops.

"It will be fascinating to see historic buildings emerge from centuries of grime and it will make it easy for us to see how London has evolved from a rural village to the cosmopolitan inner city it is today," says Eileen Conn, co-ordinator of residents group peckhamvision.org.

For generations this part of south-east London has fought a reputation for poverty, crime and high unemployment, but now Peckham — one of the most ethnically diverse areas of the UK — has begun to flourish.

Academics at the LSE are favourably comparing its new "village vibe" — where rich and poor live cheek by jowl, mostly successfully — with the tense separation of communities that has developed in Paris.

Peckham's high-profile residents include actress Olivia Colman and creatives from Tate Modern and the National Theatre. Writer Roger Williams moved there after 20 years in Kent and says: "We are caught in a swirl of social experiences: ethnic Rye Lane, which to walk down is like being on holiday; Peckham Rye Common, which is a delightful breath of fresh air. You get the arts crowd of Bellenden Road and the Bussey Building, and the trendies of Lordship Lane and East Dulwich."

Cheap seats, smart arts

John Reiss, executive chairman of Soho's Premier Public Relations (which handles Bond star Daniel Craig and actress Gemma Arterton) has bought the local cinema, Peckhamplex, in Rye Lane. The cinema is still the cheapest in London (tickets are £4.99) and Reiss has brought in film journalist Marianne Gray to programme more independent movies.

The long-term plan is to convert the multi-storey car park above the cinema to an arts centre. Reiss says: "It could be the Barbican of south Southwark." Bellenden Road, with its independent shops and cafés, is the artisanal heart of Peckham.

Butcher Charlie Shaw (formerly of the Ginger Pig chain) has opened Flock and Herd, selling wild meats. He says: "I thought the area had a lovely mix of ages, races, sexes — a huge demographic I really enjoy. There's no Tesco Local or bookies, it's just a lovely street." At Threads, Tara Postma, 25, sells vintage faux-fur muffs and Twenties tea gowns. Her friend, singer Florence Welch of indie rock band Florence and the Machine, often drops in.

At No 143, Sally Hindle has opened fashion and crafts shop, Bias. Around the corner on Peckham's Choumert Road, café Viva was set up by ex-Goldsmiths student Lily Johnson. It's a bright, modern space in a formerly gritty street. A fishmonger, cheese maker and bakery will open soon and there has been a recent influx of new galleries. Hannah Barry hosts the Bold Tendencies sculpture show on the roof of the cinema (with Frank's Campari Bar). The Sunday Painter recently sold work to Charles Saatchi.

Library festival

Just off Rye Lane, the Bussey Building houses 100 creative arts and music businesses. There's a Peckham Literary Festival — run by novelist Evie Wyld, of Review bookshop — and a flourishing restaurant scene. The Begging Bowl is receiving rave reviews for Thai street-food, while the deli-cum-café Anderson & Co was set up by Lisa Anderson (who used to produce the Brit Awards).

"I chanced upon Bellenden Road house-hunting, and fell in love with the street," she says. "The mix of bookshop, chocolatier, good clothes shops and interesting arty buildings told me that this was the spot. Then I looked at the surrounding streets and the serious building going on — clearly new people were moving in." It's just a year since the riots but Peckham bounced back — partly because of the clean-up spirit. The impromptu Peace Wall (the wall of Post-it notes of love for the area, which grew on Rye Lane) is now a permanent exhibit.

Here they come

The Shoreditch and Islington crowd have spotted that they can get more for their money south of the river. In the Bellenden renewal area, you get two-bedroom Victorian terraces and modern townhouses from £500,000. One-bedroom maisonettes go for £250,000 to £275,000. The Georgian houses on Holly Grove go for £700,000 to £870,000. In North Peckham, around Queen's Road station, you can still get ex-council flats (split-level with three bedrooms) for £225,000, or a freehold Victorian terrace house for less than £370,000. You're in Zone 2 and seven minutes from the Shard.

* Pexmas: Peckham's first festive market is on this weekend at The Dye House at Nutbrook Studios, SE15 (pexmas.com).

* Bellenden Bonanza: an evening of late shopping, music and food, including Bellenden Road shops, SE15, is on December 13, 6pm to 8pm.