Hotspotting

Many Australians grow their wealth through passive investment in real estate: buy a property, install a tenant and wait for growth.

There’s a better, and faster, way – without high risk.

More and more investors are using development strategies to accelerate the wealth-creation process, with small subdivisions one of the most accessible and successful.

Wealth mentor Brad Cassidy of The Kaizen Way teaches these strategies to investors across Australia, with notable results.

Recently, our Hotspotting founder Terry Ryder hosted Brad on a webinar to discuss how to profit from small subdivisions.

The webinar demonstrates how to … ​

** undertake a subdivision as a “hands-off” investment

** find the right team of specialists to facilitate the process

** avoid common mistakes and pitfalls

** identify the costs involved, including council fees and charges

** understand the procedures with case studies of successful projects

** find opportunities for this type of investment, using an exclusive tool developed by Brad and his team

If you would like to find out more about how Brad can help you, please follow the link below and add your details so that you can take advantage of a huge bonus woth $3,995 for the first 5 people.

Plus a special price on his membership offering. https://propertymasterythekaizenway.com/terry-special

You can watch the replay of this webinar on youtube here: https://youtu.be/t5WdKo-75l4

At Hotspotting we’re always on the alert for evidence of CHANGE that will influence property markets.

The great potential in residential real estate is that change is always happening, opening up new possibilities for growth.

One of our catch-cries at Hotspotting is that THE PAST DOES NOT INFORM THE FUTURE.

Poor performers of the recent past can become the nation’s leaders of the near future.

One of the biggest trends we are tracking, under the general theme of change, is the rise and rise of apartments – challenging the dominant paradigm of real estate.

That paradigm, still widely accepted in the real estate industry, states that houses always outperform units and townhouses on capital growth.

But that is undoubtedly changing.

We are seeing growing evidence that more and more buyers of various sorts are opting for attached dwellings – be they units, townhouses or apartments.

Buyer demand in locations where units dominant the dwelling mix - or are a significant part of the dwelling mix - has been rising notably for the past 12 months.

Suburbs where units dominate the dwelling mix are now among the most powerful markets in Australia – which makes our Top 10 Apartment Hotspots report essential reading for investors seeking opportunities in 2024.

Those seeking out well-located and affordable apartments include older people downsizing from a large family home.

They also include …

• young people seeking an affordable first step on the property ladder; 

• lifestyle buyers seeking low-maintenance, lock-up-and-leave options in good locations;

• overseas migrants from countries where unit-style living is the norm; and 

• investors seeking affordability and higher rental yields in good locations.

In inner-city precincts in our biggest cities, houses can typically cost over $2 million, but apartments can be bought in the $600,000s and $700,000s in the same suburbs in many cases.

The rental yields are also significantly higher, a key consideration in times of higher interest rates – although it needs to be remembered that apartments do entail additional costs like body corporate fees.

But the most noteworthy data relates to capital growth. In a growing number of locations throughout Australia, apartments have recorded larger increases in median prices than houses, both in the past year and over the longer term.

At Southport on the Gold Coast, apartments are considerably cheaper than houses, sell faster, have higher rental yields, have recorded bigger price growth in the past year – and the long-term capital growth rate is close to 10% per year.

There are many, many more examples like this across Australia.

So there is a significant list of good reasons why apartments are attracting growing demand from a range of buyers.

And that means that the dominant paradigm of real estate is looking decidedly shakey.

I’ve been in and around news media my whole adult life and I STILL haven’t got used to the way journalists these days can look at a set of numbers that are overwhelmingly positive but find the only negative – and make that their headline.

Somehow, journalists have formed the view that we’re endlessly attracted to screaming negatives and don’t want to hear about anything UPLIFTING that’s happening in the world.

Recently, one of the major real estate data firms published data on the property ownership rates for women and men in Australia.

This was topical because there’s a lot of focus on ways that females are financially disadvantaged, including with the level of super the average woman has at retirement, compared to men.

So the findings of this analysis by CoreLogic was a strong and positive story, because overall it showed that women are more likely to own real estate than men – only slightly, but that finding would have surprised a lot of people.

In some age groups, such as Millennials and Gen X, women were significantly ahead of men on property ownership and with the oldest grouping, Baby Boomers, it was fairly even.

Only with Gen Z, those aged under 30, were males more likely to own property than women.

So, overall, a pretty positive story, right?

Well, no, many reporters managed to turn this into a negative, by focusing their coverage on the only age group that was less successful for women, the Gen Z cohort.

Sadly, typical.

In another recent story, the Pain and Gain report from CoreLogic showed that, in most market jurisdictions across Australia, the vast majority of sales in the past 12 months had been profitable for the vendor.

In Brisbane, every suburb had recorded growth for vendors, both for house sales and unit sales – a 100% success story right across the city.

It was similar in Adelaide, Perth and Sydney – close to 100% of suburbs had delivered house price growth and unit price growth for vendors in the past year.

But a lot of the media coverage found a negative for their headline. In Melbourne, 82% of suburbs recorded annual growth in unit prices – but the media coverage focussed on the 18% that didn’t.

“Nearly one in five suburbs recorded price falls,” shouted one headline.

There are myriad examples of media’s desire to focus on – or create – sensational negatives, with little or no attention to the potential positives.

Every day, across Australia, there are articles describing the rental shortage – which doesn’t fit the definition of “news” because everyone KNOWS there’s an under-supply of rental homes – but it’s very rare to see anyone write about potential solutions to the shortage.

It’s even less likely that you will see anything published that sets out to help tenants seeking a decent place to rent.

Housing affordability is seen by journalists as a hot button issue and they write about it endlessly, but usually only from the perspective that it’s hopeless for wannabee first-home buyers, that it takes decades to save a deposit and that they’re doomed to a lifetime of renting – although, clearly, none of that is true.

It’s very rare to see anything published that HELPS young buyers, with advice on how they can get into the market.

The degree to which news media is disinterested in being HELPFUL to people – focussing instead on startling everyone to create clickbait – is quite distressing.

In news media, the oldest adage of all – If It Bleeds, It Leads – still applies, sadly.

Are you ready to take your investment journey to the next level?

Look no further, because we have exciting news to share with you! We are thrilled to announce our new Hotspotting pre-recorded interviews with some of the top 1% of Australian investors who own 5 or more properties.

As you may know, in the 2020-2021 financial year, only 0.87% of investors in Australia owned 5 or more investment properties. But what do these successful investors know that the majority don't?

We have sat down with a number of them to get exclusive insights into their strategies, tips, and personal journeys. Our pre-recorded interviews bring you valuable knowledge and advice from Australian property experts who walk the walk and practice what they preach. Learn from their mistakes, successes, and unique perspectives on property investment. These interviews are a must-watch for anyone looking to build a successful investment portfolio and achieve financial freedom.

With over 71% of investors owning only one investment property, we understand the challenges and uncertainties that come with growing your portfolio. That's why we have curated a series of interviews that exclusively feature investors with multiple properties. They represent the top 1% of Australian investors and have achieved remarkable success in their investment journey.

Our pre-recorded interviews are available for you to watch at your convenience, so you can take in all the knowledge and insights at your own pace. Hear firsthand how they navigate the ever-changing property market and make profitable investment decisions. You'll be able to walk away with practical tips and strategies that you can implement in your own investment journey.

In our latest episode of 'Interviews with the 1%', we are excited to host Marion Mays, the founder of Money Strong

In this episode, hosted by Tim Graham, Marion shares her property journey that started with buying a commerical property as her first investment, followed by a string of multiple investment properties starting at the age of 25 before finding herself in a dysfunctional relationship with a 7-month-old child and having to lean on her portfolio to not only provide a safe shelter for her and her son but also to fund 15 years worth of family court litigations.

This is a remarkable story of resilience along with a great reminder that real estate not only provides great shelter and wealth creation but also security for when things turn bad.

About Marion Mays

Marion is the Founder of Money Strong- a boutique professional mentoring firm that advocates financial literacy and proactive wealth accumulation for Women and men.

Marion lives by the philosophy that “Every woman should own one little black dress & one piece of real estate in her own name”.

At a time when Australia is buckling under the weight of the dwelling shortage problem, population growth is occurring at record levels, mostly because we are bringing in migrants at unprecedented levels.

The latest data from the ABS shows that the national population rose 2.5% last year.

That means 660,000 added to the Australian population, lifting the total close to 27 million – which is a milestone achieved well ahead of the official government forecasts.

This historically high level of population growth has been fuelled by new people arriving from overseas.

Overseas migration, in fact, accounted for 83% of the increase in population last year, with the rest achieved with “natural increase”, which means that births exceeded deaths.

Net overseas migration was 548,800 – up 60% compared to the previous year.

Those numbers, startling as they are, beg one very big question: where are they all going to live?

We already have an unprecedented shortage of dwellings in this country, especially dwellings available for rental.

The current national vacancy rate, according to Domain, is 0.7%.

Six of the eight capital cities have vacancy rates well below 1%.

The building industry is unable – for a host of reasons - to produce new dwellings at the rate required to keep up with the rapid growth in household formation.

Vacancies are destined to go on falling and the serious under-supply of dwellings will not only continue, but get worse.

And that means the upward pressure on prices and rents will continue.

The politicians and talking heads of Australia are willing to consider or recommend ANYTHING as a solution to the rental shortage – anything EXCEPT the only thing that will work.

And which, incidentally, would be really easy to implement and would have much faster outcomes than the many crackpot schemes that are being suggested.

Every day mainstream media is full of articles about the rental crisis – with an emphasis on extreme situations, sensationalist headlines and the demonising of landlords as the arch-villains of the situation.

There are also growing instances of “big idea” solutions – and media loves those as well.

Some have suggested we can solve the crisis with pre-fabricated homes.

Others have suggested converting dis-used or under-utilised office space to apartments in inner-city areas.

There are moves by state and local governments to force people who use short-term letting options like Airbnb to switch to permanent rentals, but independent university analysis has shown that this won’t fix the shortage – because fundamentally Airbnb is NOT the problem.

Some states are fining people who own properties that APPEAR to be empty, such as holiday homes owned by a family for use by family members – but that won’t have any material impact either – because this, too, is not the cause of the rental shortage.

There have been suggestions of re-purposing refugee facilities or Covid quarantine facilities or army barracks as rental accommodation for the needy.

The Greens, in their collective madness, announced in the lead-up to the Queensland local government elections that they would take Brisbane’s biggest horse racing track from its legal owners and turn it into thousands of cheap homes – all for about $40 million, they said - apparently regardless of the reality that the legal owners of the land have rights and the value of the land is, realistically, measured in the hundreds of millions of dollars.

But media lapped it up and gave it enormous mileage, even though it was pie-in-sky, pixie-eyed, idealistic nonsense, with no practical merit whatsoever.

There are constant references by politicians and commentators to the need to build more dwellings, although that is NOT the solution to the rental shortage.

In terms of housing affordability, media is full of alleged solutions like tiny houses, or pre-fab houses, or land-lease arrangements (where you own the house but not the land, on which you have to pay rent).

All of this fluff in the media is a distraction from the real issues and the only viable solutions.

We have to provide incentives, rather than discouragements, to the people who provide over 90% of the homes that are rented in Australia – mum-and-dad property investors.

And politicians at all levels of government have to stop treating the housing industry as a cash cow, because THAT is the main reason why dwellings are so expensive in this country.

One of the factors we’re constantly searching for, among the thousands of markets across Australia, is CHANGE. 

We’re on the look-out, every day, for locations where the performance of the property market is set to go to another level because of major changes in the local economy.

We sometimes surprise people by recommending areas that have a POOR TRACK RECORD on capital growth.

But, essentially, we don’t care about the PAST when we’re choosing locations to recommend. We’re only interested in the FUTURE.

When we find a location where a major program of infrastructure development is under way, or there’s a big change in the local economy - and we feel confident that this will generate elevated demand for real estate in the area - WE DON’T CARE if that location has delivered minimal growth in the past 10 years.

Our process, fundamentally, is about the FUTURE.

Let me illustrate the point with some case studies.

In the July 2020 edition of our most popular report – the National Top 10 Best Buys report – we listed the Sunshine Coast as our No.1 pick.

With the benefit of hindsight, it may appear to be a case of the bleeding obvious.

But, at that time, it was quite different.

NO ONE wanted to buy Sunshine Coast real estate back then because its track record on capital growth was terrible. 

At that time, the long-term capital growth averages of most suburbs ranged from 1% per year to 3% per year. A 10-year growth average of 3% per year means it would take 24 years for property values to double  - and property buyers want much better than that.

In the iconic suburb of Twin Waters, the median house price had dropped 13% in the previous 12 months and the long-term growth average was just 2% a year.

The vacancy rate for Mooloolaba at that time was above 3%, the precinct around Kawana and Minyama was 3.5% and at Noosa it was above 6%.

Why would anyone want to buy there in 2020? You would have to be mad, right?

But anyone who DID follow our recommendation, and bought on the Sunshine Coast in 2020, would have experienced, in the next three years, some of the most spectacular capital growth anywhere in Australia.

The median house price at Coolum Beach rose from $700,000 in mid-2020 to $1.35 million today – and median unit price rose from $450,000 to $800,000.

The median house price at Sunshine Beach rose from around $1.5 million at the start of 2020 to $3.5 million by the start of 2022. It more than doubled in two years! And the median unit price rose from $800,000 in 2020 to $1.5 million today.

At Twin Waters, which had such a poor record in 2020, the median house price rose from $800,000 to $1.5 million by mid-2022.

There are many, similar, examples throughout the Sunshine Coast market.

So, WHY did we recommend a location with such as bad track record in 2020?

Because we didn’t care about the past, we were focussed on the future. 

Infrastructure projects totalling over $20 BILLION were under way or in planning.

It was a no-brainer that this would transform the Sunshine Coast market – and it did.

Here’s another example.

We were recommending locations in Perth in editions of the Best Buys report in 2021 – three years ago. 

The April 2021 edition of the report featured the City of Rockingham, an affordable bayside precinct in the south of Greater Perth.

At that time, most suburbs of Rockingham had long-term capital growth rates of MINUS 1% or 2% per year. In other words, prices there were LOWER in 2021 than they were 10 years earlier!

Why on earth would anyone recommend a location where property owners had lost money for the previous decade?

Because we could see THE CHANGE coming – in that location and in Perth generally.

In the suburb of Golden Bay, the long-term capital growth average in early 2021 was -2% per year. The median house price, then, was $330,000. Today it’s $515,000 – it’s risen almost 60% in three years.

At Port Kennedy, it’s gone from $350,000 to $550,000.

There’s been a similar outcome for every suburb in the City of Rockingham in the past three years.

But at the time we recommended it, these locations had capital growth records that were among the WORST in the nation.

Now, here’s the key thing:-

Most real estate consumers would rather buy in an area where prices have grown 50% or 60% in the past two or three years, than buy in an area where prices have shown little growth recently.

There are far more people wanting to buy in Perth NOW, at the peak of the boom, than there were in 2021 before the boom started.

This makes little sense to the team at Hotspotting. We would rather buy in a location with strong future growth credentials when that market is DOWN, than when it’s at its peak.

But many investors, it seems, need the APPARENT security provided by recent high growth.

That attitude, we believe, shows a lack of understanding of real estate dynamics and fundamentals.

Here’s the key learning from this: 

DO NOT let a poor track record prevent you from buying in an area that has future growth potential.

The past is often irrelevant. What matters is the FUTURE.

It’s true that if you invest wisely, you can grow substantial wealth through property investment but how big can you go?

Can you double your net assets and keep doubling them to hit a $1million or $10 million or even $1billion?

Strategic financial adviser, Andrew Courtney of Plenitude Wealth, says you can and he will join Hotspotting founder Terry Ryder on Wednesday 20 March for a webinar to reveal how the “Doubling Game” and real estate investment can accelerate the process.

Courtney, an acknowledged expert on The Doubling Game, explains it like this: If you start off with $1,000 and double it 10 times you get to $1 million. Double it 10 more times you get to $1 billion. In other words, if you could double your net assets 20 times you would be a billionaire. It's all about how fast you can double.

The challenge, as you move along the cycles, is that it becomes harder and harder to speed up the process. Courtney says "achieving this level of wealth is impossible unless you're an investor. Ideally, you would have a scalable business and you need to be an investor as well,” he says. Real estate can be central to the process. Depending on where you are in the game and how much time you have, this will determine how much real estate comes into play.

In this webinar replay Andrew & Terry discuss the level of capital you need, to achieve the income you need, to create the lifestyle that you want.

When you have a major national crisis caused by the shortage of a key product, you take steps to facilitate an increase in the provision of the thing that’s in short supply. Right?

And that would logically involve providing incentives to the people who supply the commodity that’s scarce - or otherwise creating conditions that make it easier for them to create more of that commodity.

You would, wouldn’t you?

Well, you would think so in a sensible world, but that’s not what happens in Australia.

Not in the housing market, where the opposite happens. Federal, state and local governments keep making decisions that make the rental shortage worse and the general under-supply of new dwellings worse.

In the housing market, there are two things that have a serious under-supply: there’s a shortage of new homes being built and there’s a shortage of properties available for rental.

Many people think it’s the same thing – that you fix the rental shortage by building more homes, but that’s NOT the solution. 

They are two separate (although related) issues and both problems are getting more and more serious because politicians keep making them worse.

We need to build a certain number of new dwellings each year in Australia to keep up with population growth, fuelled in part by overseas migration, and the formation of new households.

In recent years, Australia has fallen well SHORT of the numbers of new dwellings needed, for a host of reasons.

The Federal Government has an ambitious target of 1.2 million new homes in five years but there is no chance of this being achieved.

One of the key reasons that we WON’T build enough new homes is because state and local politicians keep making it harder and more costly to create new dwellings.

We already have a situation where UP TO HALF of the cost of creating a new house-and-land package is government taxes, fees and charges. 

Studies have shown that the taxation component of a new house ranges from 35% in cities like Brisbane and Melbourne, up to 50% in Sydney.

Politicians keep tinkering with the design of new dwellings – in theory, to make them safer, or more accessible, or more environmentally friendly – but every time they change the rules affecting the construction of new homes, they make them more expensive.

That’s the affordability problem in a nutshell. All levels of government using the housing industry as a cash cow and milk it for revenue through a range of taxes, fees and charges. And they keep making dwellings more expensive with supposedly well-intentioned new rules.

They also contribute to the shortage of new homes and the higher cost of new homes by taking people resources out of the home building industry to build headline-grabbing new infrastructure projects.

Many big real estate projects, such as high-rise apartment developments across Australia, have been scrapped because the developers can’t get the tradespeople they need or the materials they need, and because the costs are SO HIGH that building those projects is not financially viable.

In the ACT, the Territory Government has introduced new rules for the personal liability of directors of dwelling providing entities, including not-for-profit organisations like community housing providers.

These rules are so severe that it is likely to cause a mass exodus of builders and community organisations from the ACT, thereby worsening the housing shortage there.

Here’s one of the consequences of these poorly drafted laws: if you join a board of a community housing provider today, and they have a house that was built five years ago and it has defects, you can now be held personally liable for the costs even though you were not on the board when it was built.

This has come about in Canberra because the Greens, the most destructive force in Australian politics, have a share of power in the ACT government and they regard anyone involved in the housing industry as the enemy.

Make no mistake, if you own a business or if you are an owner of investment real estate, the Greens regard you as something close to a criminal who needs to be squashed.

They are obsessed with the notion that property investors are all rich bastards who own 10 or 20 properties and are monstering their tenants and ripping off the tax system.

This is patently and blatantly false, but the Greens are not interested in hearing any alternative viewpoints.

They are the petulant brats of Australian politics.

And I’m pleased to observe that, despite all their posturing and grandstanding, the Greens failed to have any impact on the election for the Brisbane City Council, the biggest LGA in the nation, or on the two state government by-elections held in Queensland at the same time.

There’s no doubt that the serious and unprecedented shortage of rental properties across Australia has been caused by political decisions that have made investment ownership less and less attractive.

Vacancy rates have been falling steadily for the past five years to the current unprecedented low levels – and you can chart the decline in the number of available rental properties with a series of state government decisions which have made ownership onerous and caused more and more investor owners to sell up and get out.

Australia’s best real estate analyst, Simon Pressley of Propertyology, confirms that there have been 20 major state government legislations in recent years, all of them detrimental to the owners of investment properties.

He points out that the Australian population has increased by 3 million in the past eight years – but, in that time, the number of homes available for rental has DECREASED 58%, and the number of homes listed for sale has DECREASED by 36%.

Those are incredible numbers which explain, in simple terms, the seriousness of the shortage crisis.

And the politicians – mostly state governments – who have caused this dire situation are still doing it. They continue to make decisions and pass laws which make it worse.

They keep slamming the people who are the source of the product that’s in short supply.

Investors who own in Victoria are selling up and getting out in large numbers, because Victoria is by far the most unfriendly state in Australia for property investors.

They have increased existing taxes on owners and they have introduced new taxes on the people who supply the product that’s in short supply.

There are big increases in land tax, a new absentee owner surcharge, a new short-stay accommodation levy and a new vacant residential land tax on empty homes.

There’s also a new construction code which increases the costs of new dwellings and there are restrictions of rental increases.

James Kirby, wealth columnist for The Australian newspaper, commented on 15 March that the taxation nightmare imposed by the State Government was the reason why Melbourne is the worst-performing residential property market in the nation.

As a result of these measures, in just one month, the vacancy rate in Melbourne dropped from 1.5% to 1.0%, a huge change in such a short time frame. And, believe me, it will get worse.

But it’s not just Victoria. Every state and territory has made changes that shift the power balance to tenants and/or increase the costs of owners, causing more and more investors to sell.

South Australia has recently launched changes to its tenancy laws. 

The political statement says: “New rental laws have been passed by the Parliament of South Australia to improve protections for tenants WHILE BALANCING THE RIGHTS OF LANDLORDS.”

That’s the political rhetoric. Here’s the reality:  there are 17 major changes, all shifting the balance to tenants.

For example, reduced rental bonds, a ban on rental bidding, restrictions on what you can ask tenants when they applying to rent your property, limits on rent increases, new rights to tenants to sub-let, new penalties on landlords for various breaches (but none for tenants), restrictions on ending tenancies, more rights to tenants in disputes, the notice period to end tenancies increased from 28 to 60 days, a limit on inspections by your property manager, you can’t refuse pets, and new rights to tenants to make modifications to your property.

And the measures which balance the rights of the property owners?

Well, there are none.

And that, in simple terms, is why we have a chronic rental shortage which has no end in sight.

It keeps getting worse, because state governments keep making it so.

The most successful property investors that I know have some features in common and making decisions based on research is one of the key ones.

But those people are relatively rare.

It seems to me, from observing the behaviour of investors for the past four decades, that more people make investment decisions based on media soundbites than on genuine research.

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 booming, backed by commentary from real estate people who have a vested interest in prolonging the Perth boom for as long as possible.

At Hotspotting, we think this media soundbite approach is fraught with peril and that many of the people piling into the Perth market at the moment will regret their decisions, made in haste without proper due diligence.

It’s a reflection of those views that the 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 and will not be the national leader on price growth in 2024, as many 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.

Our choices for good locations to buy in 2024 are based on research-based knowledge of the key trends that are driving demand in the best locations across Australia.

We’re not focused on short-term sugar-hit gains – rather we’re focussed on places we think will do well in the medium to long term.

We base our choices on economic factors, on 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 in 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 which has seen growing 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.

More recently, we have observed a surge in demand for units and townhouses by a range of different 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.

All of these factors are reflected in our new edition of the National Top 10 Best Buys report.

It’s our most popular report, because it’s the one that considers all the events and trends happening across Australia – and identifies the markets with the best prospects for future capital growth.