The West Australian

Spotting Promising Locales Set to Bring the Heat
By Sean Briggs 

People keen on investing in the real estate market will likely have heard of the term ‘hot spot’, which typically refers to suburbs poised to see – or already experiencing – substantial price growth and buyer demand, making them top choices to purchase an investment property in. While identifying a hot spot is oft en left to the experts, there are things any investor should know when choosing where to spend their money.

According to Hotspotting Founder Terry Ryder, a hot spot is a location which outperforms market averages over the medium to long term. “Some people assume it means a market with a short, sharp rise in prices, but at Hotspotting, we defi ne it as a long-term outperformer,” he said.

“Real estate markets are very local in nature, and the key factor is the local economy underpinning the local property market. When considering a location – and whether we are comfortable to recommend it – we apply our EMPIRICAL acronym formula.”

“The ‘E’ stands for economy – we favour locations with strong, diverse economies which are creating employment. The ‘M’ refers to market size – potential hot spots have a minimum of 50 sales per year, with smaller markets tending to lack the substance for long-term growth.”

“Next, ‘P’ is for population – the local government area should have a population above 15,000 and ideally would be 50,000-plus.” Mr Ryder said the fi rst ‘I’ stood for infrastructure, encapsulating good existing amenities and evidence of investment in major new projects.

“The ‘R’ relates to the rental market, with low vacancies likely to put upward pressure on rents,” he said. “The other ‘I’ refers to increasing employment opportunities – evidence of jobs growth. ‘C’ stands for capital growth drivers – strong sales activity pointing to future price rises – while ‘A’ refers to aff ordability.”

“Aff ordability is becoming harder to fi nd, but the highest capital growth consistently is recorded in the more aff ordable areas.” According to Mr Ryder, ‘L’ stands for low risk. “We will never recommend high-risk volatile markets like small remote towns or mining towns,” he said. “The most important thing for real estate owners, fi rst and foremost, is safety for their hard-earned dollar.”

When taking the fi rst steps to identify a location to invest in, Mr Ryder advised seeking good advice and quality research data beforehand. “It’s a diffi cult task for consumers because Australia is a big country and it’s oft en hard to know where to begin,” he said. “One simple method is to follow the infrastructure trail – buying property which lies in the path of progress is a way to prosper with real estate investment. Ask yourself where the largest and most infl uential infrastructure developments are happening.”

Mr Ryder said there were many myths and misconceptions persisting about what types of properties or locations produced the best growth. “Examples include the beliefs that the cities are better than the regions, prime suburbs show the best growth and houses always outperform units – none of those beliefs are valid,” he said. “Research evidence shows the regions generally have been outperforming the capital cities in price growth for numerous years.”

“Cheaper areas have consistently grown more than expensive areas, and while houses have outperformed units historically in capital growth, in the past two years we have seen increasing evidence this is changing – in more locations, the median price growth has been higher for units than for houses.” Mr Ryder said units currently presented a better option than houses in Western Australia because of aff ordability and location. “It’s becoming harder for buyers to fi nd aff ordable homes in Perth but units present the possibility of buying with reasonable aff ordability in good locations such as the cities of Perth and Belmont,” he said.

According to Mr Ryder, due to boom-level growth for the last three years in Perth and key regional centres, it is diffi cult to point to future hot spots in WA. “The locations showing some level of value at the moment are the cities of Canning, Wanneroo and Gosnells, plus the City of Perth unit market, which remains relatively affordable,” he said.

“We also see ongoing strong buyer demand for the City of Mandurah, which is a remarkably consistent performer.” Mr Ryder recommended investors also look outside WA to expand their portfolios, predicting good growth in Brisbane, Hobart and regional Tasmania in the coming years. “The feature of Australian real estate currently is the universal strength in markets nationwide – even the weakest performers are likely to show solid growth in 2026,” he said.