Advisor insight: Hunting the hotspots

House construction site

Turn to any magazine page or click on any website that deals with property, here or overseas, and you will find at least one article dedicated to where the next big growth suburb is going to be. You might even describe this kind of knowledge as being a Holy Grail for the real estate industry, as people seem to be obsessed with searching for it.

As a result, there can often be a lot of confusion about where it's best to make an investment. Even the layman can use this kind of knowledge to better their own property portfolio, or simply make their first home purchase one that will put their best foot forward. To cut through the dross, we turn to Squirrel Senior Mortgage Adviser Kyle Moritz, property hotspot expert.

Kyle - Squirrel mortgage adviser

What makes a property hotspot?

If you want to discover the next hotspot, you first have to know what it actually is and how they are created. Every property professional will have a slightly different understanding of the term, but this one has served Kyle well so far:

"My definition of a property hotspot is a wave of affordable properties in up-and-coming suburbs," he explains.

"For investors, there is a greater capital return within a shorter period of time, as well as good future re-sale opportunities. For first home buyers, the growth rate in these areas is usually sharper than locations that have already matured. Accompanied with improved income over time, this could well be the ticket to moving up the property ladder in the long term."

The important part here is not simply that there is value growth, but that the homes themselves are already affordable - and therefore offer the most significant returns.

How can you spot them?

This is the question that can cause serious headaches for many people, but Kyle has a few select factors to keep an eye out for if you want to be able to buy in the right place. Even then, it's "easier said than done", as Kyle says.

"Population growth, existing infrastructure and future development, transportation links, an area simply being fashionable or even a demographic shift. These can all indicate a property hotspot," describes Kyle.

"I personally think that any suburb within Auckland where the average house price is under one million is in the sweet spot. Out west, Avondale, New Lynn and Te Atatu Peninsula have been real movers and shakers in recent times. Meanwhile, there's still good buying in Te Atatu South, Henderson, Sunnyvale, West Harbour, and so on."

"Parts of Birkenhead, Birkdale and Beachhaven are still well undervalued for their proximity to the CBD. People just need to get over their fear of the Harbour Bridge - it's just a motorway at the end of the day."

Finding the next property hotspot is certainly doable, but it requires a keen eye and an expert team on your side if you want to make the most of your capital. If you're looking to find out more about the real estate market and your place within it, make sure you get in touch with the team at Squirrel.