We get asked this question a lot in the course of our work and it’s not completely straightforward to answer because there’s no single hotspot but we can help you narrow down where to look very easily.
Regional and Mining Towns
Some of the biggest gains have taken place in small regional and mining towns, that can lead to people thinking these are the best place to funnel investment in real estate. The trouble is that these investments are extremely volatile and high-risk.
Small towns generally depend on a single big company to make them attractive places to live and work in. If the mine is open and doing a roaring trade; everything is rosy. But if the commodity they produce suddenly goes out of fashion and the mine closes – so, for all intents and purposes, does the town.
It goes from a thriving community with high house prices, thanks to nice mining salaries, to a place where everybody wants to leave and property is suddenly impossible to give away, let alone sell. You can’t stay ahead of the curve on this either – by the time the information that the mine is in trouble is in the public domain, everyone will want out.
We just can’t recommend this kind of investment. No matter the potential upside, the potential downside could leave you broke and stuck with a property (and paying a mortgage on it) that nobody will rent or buy.
Big Cities
Big cities, on the other hand, are nearly all upside from a long-term investor’s perspective. Sure, there may be the occasional brief dip in the market but in the long run, property prices will always increase.
Why? Well, firstly the big cities don’t have any dependence on big employers. Sure, it may hurt the local economy if a whale suddenly ends up beached but sooner or later, the other companies and industries around will pick up the slack left behind.
People are also attracted to big cities. The wealth of amenities and opportunities are alluring, to say the least. That means you’re always going to have buyers looking for something even if the market isn’t at its peak.
Finally, of course, there’s the fact that there’s a limit to the size of any city before a location becomes impractical.
Sydney, Melbourne and Brisbane are always going to be property hot spots because they’re where the nation’s wealth is… and money attracts money. If we ever reach that beautiful day when every Australian has a job, the big cities will continue to attract newcomers to Australia too. Immigrants love the big city lights as much as the rest of us.
Summary
Steer clear of one industry towns; they may appear tempting but if something goes wrong – your investment can end up tanking completely. We don’t want our clients to find themselves in that kind of situation.
It’s best to sink your money into property investments in the nation’s property hotspots: Brisbane, Sydney and Melbourne.
Here you can read about what I do to find the perfect property investment for my clients.
