We study vortex clustering in type-II superconductors. We demonstrate that the "second peak" observed in magnetisation loops may be a dynamical effect associated with a density-driven instability of the vortex system. At the microscopic level the instability shows up as the clustering of individual vortices at (rare) preferential regions of the pinning potential. In the limit of quasi-static ramping the instability is related to a phase transition in the equilibrium vortex system.