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Spotting the property hotspots is one thing, but staying on top of them or expanding your current portfolio is quite another! Check out these three tips to ensure you're making the most of your real estate capital.
1) Keep an eye on population
The more people there are looking for a home, the more expensive those homes are going to become.
This is possibly one of the simplest rules of house-hunting: the more people there are looking for a home, the more expensive those homes are going to be. Many people look at supply-side issues, where there aren't enough homes being built in order to accommodate the number of people in an area.
However, there are also demand-side effects as well. Housing supply may be ticking along at a very rapid pace, but if people are coming into an area even faster, then that causes price jumps as well. This can be on a small scale, such as a particular suburb becoming more fashionable to live in and thus causing more people to move there, or on a grand scale, such as the 170,000 new migrants Australia saw in 2014 according to the Australian Bureau of Statistics.
Regardless of the cause, if you start seeing a sudden jump in the number of people interested in or just existing in a particular city or state, you may very well see prices starts increasing along with them.
2) Seek affordability
Regardless of whether you are a first home buyer or an investor, it's all about the return on your investment when it comes to real estate.
If you had significant capital and were only concerned about growth in general, it would be all too easy to just buy in the centre of a capital city and watch your prices rise. However, what makes a property hotspot different from mere high-gain areas is the affordability. Buy low and sell high, it's the mantra of nearly every kind of investment.
Regardless of whether you are a first home buyer or an investor, it's all about the return on your investment when it comes to real estate. With prices in the capital cities continuing to grow rapidly, you find that more people are being pushed out of the metros and into the regions. Demand is shifting outward, and you may find that a suburb on the outskirts of Sydney or Melbourne, for example, suddenly start ticking up in price due to this ripple effect.
So it isn't just about affordability for you - it's about predicting the rush for affordability for others as well. An affordable area bought today may well attract enormous numbers by next year, dragging the value of your home along with it. That's exactly what the Real Estate Institute of Victoria has discovered is happening in Melbourne, with North Melbourne quickly becoming the place to be for a bargain property with sudden value gains.
3) Go where the jobs are
The property market is intrinsically linked to the employment market.
What is one of the primary things that people consider when either buying a new home or moving to a new area? Their employment prospects, of course. Whether it's moving closer (or too far away) from their place of work or taking on a new career on the other side of the country, the property market is intrinsically linked to the employment market.
You can already see this happening in places like Western Australia - classic mining areas that have seen a pretty hard downturn as employment prospects disappear along with the mining boom. Perth has already seen a 4.66 per cent drop in CoreLogic RP Data home values as a result of this change, and while there is still a light at the end of the tunnel for this mining state, that is little comfort for people who were planning to capitalise on their homes for sale already.
Staying on top of the property hotspots across the country is all about being able to accurately predict the future: Easier said than done, and property professionals spend years of their lives learning to recognise these trends. Ultimately, property hotspots are all about demand - buy where people want to be, and you'll be able to score a premium when it comes to sale time. Knowing where the demand is, that's the tough part!
