Perched on a hillside above the gritty, funky streets of San Francisco’s Mission district, Bernal Heights feels a world removed from the city below. And that’s exactly the way the locals like it.

“Bernal isn’t the next neighbourhood in San Francisco; it’s the last neighbourhood in San Francisco,” says Reema Bahnasy, a public relations executive who moved there when she returned from a stint abroad in Singapore last year. “It’s almost like a secret hiding place.”

Long the preserve of working-class families employed in the nearby Bayview industrial district, Bernal (which rhymes with “kernel”) has been colonised in recent years by a wave of newcomers, including one of San Francisco’s biggest lesbian communities and, increasingly, young professionals in search of some of the city’s last affordable housing stock.

Far from posh city neighbourhoods such as Russian Hill or the Marina, where postage-stamp-sized apartments command prices in the high six figures, Bernal remains one of the few places in San Francisco where young families of less extravagant means can hope to find a two- or three-bedroom detached house with a yard for a growing family. “It’s as affordable as you can get in San Francisco,” says Kristin Hofso, owner of estate agent Bernal Hill Realty.

After a brief lull last year, house prices are again rising but they remain lower than elsewhere in the city. The average selling price of a Bernal home in the last three months of 2006 was $842,797, with prices bottoming out about $450,000 for a one-bedroom, one-bathroom condominium near the neighbourhood’s fringe. That compares with an average of $946,582 across San Francisco, according to Trulia, a real estate search engine.

Larger homes, with three bedrooms or more, can command up to $1.5m in the neighbourhood. But that’s still lower than the $2m mark that has become common around San Francisco, pushing many families beyond the city limits.

For those who choose to stay, Bernal Heights has proven a comfortable landing pad that has retained its character in spite of the recent population boom. Its narrow, sloping streets and Victorian homes are full of working artists and other bohemians who continue to take pride in their community’s offbeat reputation and relatively unknown status. “Bernal has a feel that’s a little edgier,” says Ben Phillips, a speechwriter at Hewlett-Packard, who moved to the neighbourhood nine years ago from nearby Noe Valley. “There is still this rogue alternative element. I hope it doesn’t go away.”

Lamisse Droubi of Droubi Real Estate thinks this alternative vibe is one reason that house prices have remained low when compared with other parts of the city. A brisk stroll up Cortland Avenue, Bernal’s main drag, reveals the quirkiness in full effect. Within a block, the worn-down storefronts and dive bars of the Mission give way to a more chilled atmosphere as commercial buildings are replaced by rows of houses. Young, stroller-pushing mums mingle freely with flannel-clad hipsters and grannies in Bernal Heights-emblazoned hoodies.

Cortland has been a hub for Bernal’s new arrivals since the 1960s, when Wild Side West, a local lesbian hangout, first opened its doors. The bar remains but over the past several years it has been joined by a bevy of shops catering to yuppie families. One of the most prominent is Liberty Café, which sparked a cultural renaissance on Cortland Avenue when it opened its doors in 1994. Last year it was among a handful of city establishments to win an endorsement in Michelin’s first survey of San Francsico restaurants.

Chain stores are conspicuous by their absence. Bernal’s neighbourhood association recently lobbied against Home Depot’s plans to build a shop in the downtrodden Bayview district at the neighbourhood’s southern fringe in an effort to protect local independent businesses.

A sharp left turn up Andover Street begins a steep climb to the top of Bernal Hill, the protrusion of grass and bedrock that gives the neighbourhood its name. As one marches up, the bustle of Cortland Avenue is soon replaced by quiet, narrow streets and wood- shingled Victorian properties. At the top of the road, there are secret gardens and winding stairways that lead to a park at the very top of the climb. This is one of San Francicso’s only leash-free green spaces and has become something of a mecca for dog owners to let their pets run. For the past several months, undomesticated fauna has proven to be a draw as well. Locals say that a pair of great horned owls has taken up residence in the oak trees that line the road up Bernal Hill and, although they haven’t yet shown signs of nesting, they’ve been adopted as local mascots.

Those who make the exhausting walk to the top of Bernal Hill are rewarded with a sweeping panorama of the city below, from Twin Peaks in the west to the Golden Gate Bridge and the towers of San Francisco’s financial district to the north. To the south-east lies the city’s southern boundary at San Bruno hill, with views of San Francisco Bay and the rest of the peninsula beyond.

Like most of the rest of San Francsico, getting into Bernal can prove tricky for home buyers. There are still bargains to be had, Hofso says, since most streets have at least one older home in need of renovation. But only about 200 homes were sold in the neighbouhood last year and multiple bids on a single property are common. Bahnasy says it took her three tries before she secured a three-bedroom house on the neighbourhood’s north side.

Those who do manage to buy in Bernal have a full calendar of off-beat social and cultural events to enjoy. Each year Cortland Avenue plays host to one of the city’s most overlooked street fairs and in the summer a local festival screens films made by Bernal residents in an outdoor theatre on top of the hill. In October, contestants in San Francsico’s only soap-box derby will careen down the road that circumscribes the top of Bernal Hill in a winner-take-all race to the bottom. “But you won’t find anyone who will talk about it because it’s officially an illegal soap-box derby,” Hofso says.

“Bernal has a quirkiness to it that appeals to some and not to others,” Droubi concludes. “But once people land there it becomes cult-like.”

■Bernal Hill Realty, tel: +1 415-206 1300; www.bernalhill.com

■Droubi Real Estate, tel: +1 415-550 1300; www.droubirealestate.com