Booms and Hotspots

Posted by Daniel Joseph

Whenever people ask about property investment, there is one consistent question; where is the latest ‘hotspot’? Too often, there will be a lot of focus on the wrong area.

There are several reasons for this misplaced focus, with the major one being what is reported in the media.

People are looking in the wrong places, such as local papers and articles written by non-experts that are reporting on spectacular property growth within an area over the last few years.

The issue is simple – by the time you’re hearing about these ‘boom areas’ it is often too late. They have already had strong gains in the preceding years and this is often why the media is reporting on them. As Hotspotting director Terry Ryder states, ‘If you buy now, you’re paying for someone else’s capital gains.’

If you can look past the issue that these statistics on ‘growth’ in property prices are typically not relevant to an investor (as median prices are a flawed measurement), the fact remains that this growth should DETER most investors. The best way to maximise gains is to buy at the bottom of the cycle and work counter-cyclically, which typically presents superior buying opportunities.

The only way to find these areas before the media reports on the growth is to do thorough and intelligent research – look in the right places, and look for the details on infrastructure spends and employment growth.

There are no shortcuts or quick results in property; it’s not that kind of asset. The same can be said of property research.

Property has, however, been proven to be the number one long-term wealth creation asset throughout Australia’s history. Thorough research will help deliver the best returns.

Posted by Daniel Joseph, on 21st Feb 2013