Hotspot reports a trap for rookies

Glowing property hotspot reports have long been seen as a 'cheat-sheet' into what's up-and-coming, however industry experts have revealed the information often influences poor choices rather than good quality selections.

Editor in Chief for Property Portfolio Magazine, Debra Beck-Mewing said the problem will be even more evident now that the Australian property market is emerging from the restrictive influences in operation prior to the Federal election on 18 May 2019.

What is it?
A property investment hotspot is an area or suburb that has been earmarked as having potential for stronger growth compared to the rest of the market.

Hotspot reports are issued by a number of organisations aiming to profit from being able to name the next 'hot suburb'. However, the reports are often based on outdated statistics and point to areas that have already peaked, so the purchaser is being influenced by history, not a sales predictor.

"The use of outdated information is just one of the hotspotting features that mislead buyers," Ms. Beck-Mewing said.

Another trap
"The other trap I see is buyers relying on these tips aren't aware that even if a suburb could be correctly predicted as 'hot' it might not be hot for the type of property the buyer needs.

"Each suburb has numerous markets such as three bedroom houses versus town houses or low priced property versus higher priced property. So while a suburb might be highlighted as having potential, it's important to know whether this will be the case for your property type and budget," Ms. Beck-Mewing said.

Buyers should also be mindful that most hotspot reports will be significantly out of alignment as the property market has experienced rapid changes since the Federal election in mid-May.

"We're operating within an extremely different market than the one in operation prior to the Federal election. The market has two distinct speeds with some property types attracting crowds at auction while different property in the same suburb needs significant discounts to achieve a sale," said Beck-Mewing.

"The new market conditions mean that buyers should be particularly careful to conduct independent research in order to make informed decisions as investing success comes when you're one step ahead of the pack, not following a potentially fabricated trend," Ms. Beck-Mewing said.

For more information on how to successfully build a property portfolio without getting caught in the traps, pick up a copy of Property Portfolio magazine, available here.

Author: Debra Beck-Mewing

Debra Beck-Mewing is the Founder and CEO of The Property Frontline.  She has more than 20 years' experience in property investing, Australia-wide and has used a range of strategies to build her property portfolio including renovating, granny flats, sub-division and development. Debra is skilled in identifying development opportunities, and sourcing properties that have multiple uses and multiple exit strategies.  She is a Qualified Property Investment Advisor, licensed real estate agent and also holds a Bachelor of Commerce and Master of Business. As a passionate advocate for increasing transparency in the property and wealth industries, Debra is a popular speaker on these topics.  She is also an author, podcast host, Editor in Chief of Property Portfolio Magazine and participates on numerous committees including the Property Owners' Association.

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Disclaimer – This information is of a general nature only and does not constitute professional advice.  We strongly recommend you seek your own professional advice in relation to your particular circumstances.

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