The art of picking winners: How investors find Australia's next property hotspots

Smart investing is always about working out which areas of the country are best positioned for long-term capital growth – before everyone else jumps on the bandwagon and starts to pump up prices.

For Hotspotting founder Terry Ryder, that means a series of complex calculations around infrastructure investment, local economy strength, population size and trends, employment growth, depth of demand, vacancy rates and affordability.

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So when he starts touting areas showing huge potential, it’s certainly worth taking note.

“We apply the same data and metrics to every location in Australia to make sure the best ones tick all our boxes for long-term view,” Ryder says. “It’s about identifying future hotspots; not the ones that are already hot and might be on the verge of cooling.

“Real estate markets are very local. We don’t have a single national market, so it’s very important to measure each area on its own merits.”

His company’s latest list is topped by Greater Hobart, which, he believes, combines affordability, lifestyle appeal and a strong economic base, with critically low vacancy rates and comparably strong yields.

According to the latest Domain House Price Report, it has a median house price of $818,557, up 17 per cent in the June quarter and 11.6 per cent on the year, with units at $573,955, up 1 per cent annually. House rents are now at a record $750 a week, and units at $700, with yields at 4.54 and 4.77 per cent, respectively.

Harcourts Hobart agent Rory Ferguson says investors are starting to flag Greater Hobart as a high-growth area.

“It does reflect the fact that it’s coming off the bottom of the property cycle,” he says. “Post-pandemic, there was a huge correction, but we’re now expecting it to go up again.

“A lot of interstate investors are looking at Hobart as an option, particularly as it’s affordable compared to the rest of the country. You can find a house here for $600,000 which you can’t find in many other places.”

Ryder’s second pick is units in Western Australia’s Belmont, which sits on the Swan River six kilometres east of the Perth CBD. It’s close to the airport and major employment hubs, and benefits from mining company offices, transport, logistics and manufacturing.

Perth’s median unit price is $702,180, up an astonishing 23.9 per cent over the past year on Domain figures, with a record weekly rent of $700 a week, annual growth of 7.7 per cent and a yield of 5.13 per cent.

“But in some areas of Belmont, we’re seeing yields of up to 8 per cent,” says Jasmyn Wright, co-founder of Realestate 88. “In one new development we launched, Bel-Air Apartments in Belmont, we’re seeing one-beds renting for $700 and two beds achieving $850, and one two-bed apartment that was bought for $608,000 18 months ago is reselling for $150,000 more.

“There’s a very high cost of construction and shortages of materials and labour, so supply is low, while the population is still increasing. So why would people worry about negative gearing if they can be so positively geared?”

Hotspotting’s other top favourites include West Torrens in South Australia, Bendigo in Victoria, Queensland’s Sunshine Coast, Muswellbrook in NSW, Dandenong in Victoria, and Sydney’s Parramatta.