Australia's Top Faux Property Hotspots

Australia's Top 5 Faux Property Hotspots Australian's all love a property hotspot. You know, the next hot suburb or area that is all set to explode in value and in the process set you financially in a matter of months. Every day we're reading newspaper articles, talking to our friends at barbeques and listening to the 'experts' who are all quick to announce the next big growth hotspot and why they think it's set to explode. At the same time, there are actually many good reasons for us to be attracted to the idea of getting some quick capital growth from one of these property hotspots. If our equity grows quickly enough, it allows us to leapfrog into our next property and build our property portfolio faster so we can quit that job we hate and find our way into retirement well ahead of schedule. The truth of the matter is that we all want to take a shortcut and find that nugget of gold. That's just human nature. Unfortunately, the reality of the situation is that many of these hotspots that the media and property spruikers love to talk about are not that hot at all. In fact, they're the complete opposite of a hotspot. In many cases, they are actually a total basket case and should be avoided at all cost. Let's be very clear here. These are suburbs and areas where you will simply lose money in the next few years. Despite the hype, these are suburbs and areas that are sub-standard and must be avoided. It's also important to note that these are not areas that are off the beaten track. The suburbs we're talking about are ones you're probably reading about and seeing positive news stories on every week. Perhaps you're even hearing about them at that seminar you attended last weekend. These are suburbs where there might very well be high demand at the moment and even people who want to buy into them right now. To the untrained eye, these suburbs look like they could be a potential hotspot for all those reasons. The reality is that they all have one, or many, major flaws that will simply not allow them to achieve any form of capital growth in the foreseeable future and are compromised in a pretty big way. We feel that they are basically no go zones for investors. At Ripehouse, we're able to use technology to help shield our clients from both the experts and the property spruikers who are making both dangerous and largely baseless claims about where investors should be looking to buy. Our technology edge combined with our own research has helped us identify the suburbs we need to avoid at all cost. Moreton Bay Moreton Bay is all the rage at the moment. From the outside, it ticks all the boxes and has all the things you would expect would lead to capital growth. There's been a train line extension suggesting the Government is looking to develop the area. The council is bullish on the growth of the area, there's a business park, a new university, Ikea and Westfield as well as strong population growth with forecasts suggesting there will be more to come for the next decade. But there's a big problem - supply. There are many many new houses being built, with more on the way. If you look at the Brisbane suburbs and check the new builds per annum, it would be no surprise to see the inner suburbs growing sharply given the high rate of inner-city development. However, there is one area in Moreton (postcode 4505), where new houses have grown at 12% over the past 12 months. What that means is for every eight new dwellings that currently exist, one more is being created. That's a very scary proposition for potential investors as it is clearly outstripping the impact of any positive population growth. That might not seem like a big deal, but a property is never going to grow in value if people can simply go out in one years time and buy the exact same property at the exact same price. When hundreds, if not thousands, of new allotments, are minted out of dust virtually overnight, it's foolish to think that a one-year-old or even a three-year-old house can go up in value. This has happened time and time again and Moreton Bay is a perfect example of how excess supply kills a housing market. We have also calculated that almost 20,000 new lots will be going into the South Moreton area over the next few years. Which will, in fact, be even closer to the Brisbane CBD. So people will actually be driving past that new development area in South Moreton on their way to potentially purchase an investment property even further away from the CBD. Clearly, there will be no growth in Moreton Bay any time soon. Geelong We've actually had tremendous success buying in Geelong in the last 3-4 years. In many cases, we have seen more than 15% capital growth per annum recorded on client purchases - but we were buying in very select pockets where there were natural constraints on supply. We are still seeing Buyers Agents who are buying new properties here, where there is a clear supply risk that is extremely concerning. This looks like another huge red flag. More on Geelong next week as well as areas 3-5 in our detailed report