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Research Beats Hype

Research Beats Hype

The most successful property investors have some features in common – and making decisions based on genuine research is one of the key ones. But those people are relatively rare.

My observation of the behaviour of investors over four decades shows that more people make investment decisions based on media soundbites than on real research.

And, as we embark on a new financial year with all kinds of competing forces in play in real estate, it’s more important than ever that real estate consumers base their decisions on research, rather than media frenzy and herd mentality.

Far too many people are leaping recklessly into the Perth property market because mainstream media keeps telling them that prices are booming and will keep on doing so, backed by commentary from real estate people who have a vested interest in prolonging the boom.

At Hotspotting, we think this media soundbite approach is fraught with peril and that many of the people diving into the Perth market – grabbing anything that’s for sale and paying more than the asking price, without regard for the quality or location of the property – will regret their decisions made in haste without proper due diligence.

It’s a reflection of those views that our new edition of the National Top 10 Best Buys report does not include any locations in Perth. Based on detailed research, we think this market has peaked (after three years of major price growth) and will not be the national leader on capital growth in FY2025, as some are predicting – or hoping.

We think there are other, better places for people to be putting their money – safer, less volatile, less heated markets with good potential for capital growth. Well-researched investors buy in areas with growth credentials BEFORE prices escalate.

Our choices for good locations to buy in FY2025 are based on research-based knowledge of the key trends driving demand in the best locations across Australia. 

We’re not focused on short-term sugar-hit gains; we’re focused on places we think will do well in the medium to long term. We base our choices on economic factors, demographic trends and on the locations of influence from big infrastructure developments.

At Hotspotting, we are constantly on the look-out for evidence of change in property market trends and individual locations.

Places that have been weak performers on capital growth in the past can become the leaders of the future because something major has changed in that market – often caused by the development of major new infrastructure.

Sometimes it’s a significant demographic shift – such as the trend that has seen large numbers of people leaving the biggest cities and moving to smaller cities or to regional areas, in search of a different and more affordable lifestyle, enabled by technology.

In the past 12 months we have observed a surge in demand for units and townhouses by a range of buyer cohorts, for a host of different reasons – and this is changing one of the dominant paradigms of real estate: that houses outperform units on capital growth.

We have also seen he re-emergence of markets that had exceptional price growth from 2020 to 2022, have had 18 months of correction or flatlining and now are starting to grow again. We call them “the second wind markets”.

Real estate is dynamic, with change as a constant: if you read the new edition of our National Top 10 Best Buys report, you will know about all the key trends that matter in the new 2024-25 financial year.

 

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