The psychology of hotspotting, exclusive interview with Ben Kingsley

Hotspotting is as much about a mindset as it is about spending days looking at statistics and spreadsheets, and the two approaches are powerful in combination.

Empower Wealth's Ben Kingsley sat down with Property Observer to provide an insight to his philosophy of finding the next suburb to grow in value, particularly in terms of longer-term areas.

He describes some of his philosophy and theories around hotspots here:

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Kingsley explained that research is a crucial part of his company's hotspotting method, and is the first point of call when it comes to analysing the 15,000 or so suburbs across the country.

By starting with the data, it helps save time that would otherwise be spent trawling the marketplace.

"We do a lot of skimming of different websites for data, so we have someone full time at the business collating the data. Some of the bigger data, batches we're looking for, such as things like clearance rates, we spend a lot of time analysing," he said.

However, it's not on a broader suburb level. Investors must dig right down into the types of properties and number of bedrooms when looking at clearance rate statistics if they are to make the most of this real-time indicator of demand.

"Broadly speaking, supply and demand indicators such as stock on market, vacancy rates, and those types of indicators are worth looking at. 

"But as we drill down to the more scientific stuff we start looking at the socio-demographics of an area, the makeups of the households, the incomes and the level of education that those households have," Kingsley said.

Having buyer's agents in the field is one way that they confirm their suburb choices. After rolling through the data to identify key drivers, they receive feedback from their team on a daily basis as they are out buying for clients.

"There's anecdotal and real life evidence that supports our analysis," he said.

Testing hotspot theories is also important, and back-testing can also help explain whether an area will add-up. 

"So we might take census data from 2011 and 2001 and see if areas changed as anticipated, so did the income we forecast materialise in those areas?  It's hard."