Don’t Invest in Hotspots!

New property investors are often wanting to find out where the hotspots are.  The problem with hotspots is that they are only identified as hot once the smart investors have already entered that area and the prices have already risen.

That doesn’t mean there are not future returns to be had, it is just more likely that the bulk of the short term growth has already been realised.

Another problem with hotspots is what actually defines a hotspot.  The Housing Industry Association regularly release a Population & Residential Building Hotspots report that provides a ranking of Australia’s top 20 Hotspots.

An area qualifies as a Hotspot if:

  • its population grew by more than the 1.4 per cent national average during 2015/16 and;
  • at least $150 million worth of residential building was approved during the year
HIA Hotspots

Source: HIA

Based on that criteria, in the 2017 report that was just released, the top ranking Hotspots for Melbourne are Docklands, Southbank, South Yarra and Melbourne, all suburbs with high density development and most likely, an oversupply of apartments that won’t be conducive to growth or attractive investment returns.

The information contained in this article is General in nature and has been prepared without taking into account your objectives, financial situation and needs. When assessing any investment you should also consider that past performance is not a reliable indicator of future performance.

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