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Property ‘Hot Spots’ – Where to buy investment property & how to predict the next boom suburbs!

Have you ever wondered what makes a particular suburb a ‘hot spot’? How do property experts make these predictions? Well, the answer put quite simply is formulated by trolling through onerous amounts of research and statistics on many property factors – including specific suburb buying and selling data (view our selction of properties for sale here), demographics, development and infrastructure proposals, as well as pinning where particular areas are sitting in their property cycle. Some of the indicators used to determine the ‘hot spots’ before they become ‘hot’ (also the best time to purchase). Also to see InvestmentProperty.com.au's hand picked property investment opportunities you can search for a property here. For more information about each of the above factors read on below:

Population Growth


Population growth in a particular suburb can show areas that are set to attract further development and may have a shortage in housing. When looking at this indicator it is important to look for consistent growth over a longer period of time rather than quick bursts of growth over a short period of time. Then you need to work out what is driving this growth and is it sustainable. It is important to determine if the population growth is industry related or seasonal which makes the property market reliant on uncontrollable fluctuating factors. Be careful with this indicator – you want sustainable population growth from long-term industry investment, and you need supporting facilities for the growing population. Population growth is generally considered a positive factor for an increase in housing demand.

Rental Demand

If a particular suburb is experiencing a higher than normal level of rental demand, then its vacancy rate – the percentage of all rentals that are unoccupied or not rented at a given point in time; will be low. The aim is to find an area with a high demand for rental properties, and therefore a low vacancy rate. As a guide, a normal rental property will experience a vacancy rate of approximately 2% per annum. A low vacancy rate also often indicates an area where supply may not equal demand and therefore the rental market will be able to demand more rent from tenants. It’s about consistency – looking for a suburb where you can get the right return for your property, and it all comes down to doing the research before you buy.

New Development

Does the suburb or area you are considering have any new development proposed? Are there new land releases proposed for housing or any new industrial estates being developed? Are there new shopping complexes or upgrades to existing facilities proposed?

These are all important. If you are looking to purchase an investment property, the area has to be attractive to tenants. There has to be facilities to cater for their lifestyle and places for employment.  It’s always a good idea to take notice of what some of the major companies like Stocklands, Woolworths, and Bunnings are doing. If they are willing to invest in an area where they need thousands of people through their doors to make their investment viable, then it’s a pretty good indication that the suburb has potential.

Other facilities that are important to tenants are the proximity of Schools, community facilities (parks, sports ovals, libraries) and the availability of public transport. These services increase demand for property and this reflects on the rentability of your investment property. However, ensure you combine development indicators with other indicators mentioned to make an informed decision on where to buy. Lots of development and facilities does not always mean there is a demand for rentals – particularly if owner occupancy rates are positive. 

The Property Cycle

Where to Buy Investment PropertyThere is an old adage that exists in the real estate market of ‘buyer’s market’ and ‘seller’s market’. There is truth in this statement and it all comes back to the property cycle. In a nutshell, depending on a range of economic factors, demographic factors and also real estate market trends there is time to buy and a time to sell. Now this does not work for everyone, it will depend on your investment plan (strong capital growth vs high rental yield) and location. The main points of the cycle are:

  • A property boom – Rising property values, more buyers than sellers.
  • The Slow-Down – Rental yields start to drop and there is a stock oversupply.
  • The Slump – Falling valuations, more sellers than buyers.
  • The Recovery – Stock levels tighten, rentals increase and prices start to rise

As a purchaser of an investment property, you want to buy near then end of the slump and definitely before the end of the recovery. Be aware that by the time the media gets hold of an area and labels it a ‘hotspot’, generally the best time to buy has passed and prices are about to sky rocket.

Where do I get information about property?

To get information about the property market, we suggest checking out the following resources as a starting point.:

Our company specialises in finding property hot spots... it's what we're experts at, so if you would like more information about our current selection of properties or just need more help, simply give us a call on 1300 212 949 or contact us here.

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