Welcome to the new Hoxton

Charles Saatchi, Britain's most famous collector of modern art, and the down-at-heel area of New Cross in south London would appear to have little in common. Where Saatchi and his South Bank gallery reign supreme over the British art world, New Cross is a flyblown, two-mile square collection of Victorian tenements, suburban streets and takeaway restaurants at the bottom of the Old Kent Road.

It sits anonymously between the council estates and warehouses of Deptford to the north, and leafy, prosperous East Dulwich and Blackheath to the south and east. And yet, Saatchi - and other voracious collectors like him - are increasingly regular visitors to this forgotten corner of Lewisham, and for one very particular reason.

For this small part of SE14 is the latest and largest enclave of ambitious and talented young artists in the capital. Forget Hoxton, the magniloquent part of east London once so achingly trendy and forever associated with BritArt stars such as Damien Hirst and Tracey Emin.

Instead, and seemingly unnoticed, this anonymous area south of the Thames has stolen Hoxton's crown as the truly alternative arts quartier. For more than 10 years, it was to the East End - with Hoxton's brash and exclusive galleries and restaurants - that the art world (and its hangers-on) flocked, turning it into a ghetto of modern art, with all the self-importance that goes with it.

But no longer. Hoxton has become a victim of its own success. Property prices have become so exorbitant that young artists (or rather, those who were not turned into overnight media stars and millionaires by the likes of Jay Jopling and Saatchi) can no longer afford to live and work in the area. Equally, and ironically, the more fashionable Hoxton has become, the less appealing it is to many young artists. And as they have moved out, so collectors like Saatchi have followed in pursuit of the latest, undiscovered talent they can snap up and launch on the art world.

So, where Hoxton is seen as pretentious and commercialised, it is the smoggy Victorian lanes of New Cross which are full of a vibrant and diverse collection of artist studios and co-operatives.

"Yes, it can certainly feel threatening around here," says Mauro Bonacina, 27, a New Cross artist currently being raved about by the likes of Saatchi, who has bought a number of his works.

"When I first came here I wasn't exactly taken with it. But young artists, who can't afford to pay the sort of rents being charged in Hoxton, have moved here instead. There is a strong community and it's very exciting. Quite simply, I love it."

Bonacina, who was born in Milan but raised mainly in Britain, is being talked about as the "hottest" New Cross artist so far. But however great the rewards his Saatchi-inspired success may reap, he has no plans to move out. His studio is just round the corner from an Iceland supermarket, which is about as far from Hoxton as you can get. He pays a mere £300 a month to rent his studio; in Hoxton, it would be twice that.

In a further irony, New Cross rather resembles what Hoxton itself was more than 10 years ago: edgy, undiscovered and affordable.

"There's a certain feeling of the ghetto here," says Bonacina, "if you get what I mean, but it has an energy and a life you do not get anywhere else, and certainly not in most of Hoxton. I was speaking to Gavin Turk [the young avant-garde British sculptor] recently and he has moved out of Hoxton because it's difficult to be left alone there, with the crowds and kids trying to be trendy."

What is genuinely, surprising about the area is the sheer number of artists living and working here. It's helped, of course, by the fact that Goldsmiths College, one of the leading art schools in Britain, is bang in the middle of the borough. New Cross may not yet have the "pose value" of Hoxton, but in terms of genuinely creative and alternative work, it makes Hoxton look almost tired and dated.

Artists like Jen Wu, 26, from upstate New York, who studied at Goldsmiths but now runs the Temporary Contemporary gallery in New Cross with her partner, Anthony Gross. "What's great about New Cross at the moment is that it's new territory and people can do new things," she says.

The nearby Laban dance and movement school, the largest and best-equipped of its kind in Europe, is in nearby Deptford Creek, and has become an "adopted" part of the New Cross art scene.

Stop in any cafe or pub and you're more than likely to bump into a former art student with plans to open a new artists' co-operative somewhere around New Cross Gate and within walking distance of the local Sainsbury's.

"I know people will think it all sounds a lot of rubbish, but there is an incredible energy about this place," says Dominic Ellison, 25, an artist and another Goldsmiths graduate who oversees the legendary Moonbow Jakes's cafe, the main young artists hang-out where you can sip segrafredo coffee (the best espresso beans from Italy, apparently).

"Hoxton has become the new art Establishment; we are very different. That other art world has nothing to do with what's young and new; it's all about money."

Artists like Ellison (who is about to launch one of a number of new co-operatives in the area) claim that while New Cross is about to get trendy, the place won't essentially change. "It's gritty and grimy and people haven't heard of it, but it's great if you're a young working artist."

New Cross artists think of themselves, with some justification, as being on the cutting edge of "street art", as opposed to the swanky art dealers of Hoxton, talking telephone-number deals with their friends in New York.

Property prices - both for work spaces and homes - help, of course. Where in Hoxton a two-bedroom flat will fetch a rent of up to £2,000 a month, in New Cross it is less than half that. "We have seen a change in the area," says Candice MacDonald of the local Winkworth estate agents.

"There are younger clients, houses are much more affordable. It's a slightly strange place, in that it has a huge mix of people from different backgrounds and cultures, but people are discovering it is a lively and affordable place to be."

Of course, when you mention New Cross to most people, there is either one of two slightly astonished reactions: where the hell is it? And why on earth would anyone want to live or work there?

Those who still think so should ask Charles Saatchi, and the young unknowns he's about to make very known indeed.