THE POWER OF BIG DATA TO PREDICT CAPITAL GROWTH

Boomscore calculates the ratio of demand to supply for units and houses in 15,000 suburbs

Analyse property market data with boomscore suburb profiler and choose the best investment locations

The law of Supply and Demand

The solution to finding those rare high growth locations - before everyone else arrives and pushes prices up - requires calculating and comparing the ratio of demand to supply for property in every suburb countrywide. The timeless law of supply and demand states that if demand for property outweighs supply, then prices will rise.
Conversely, if supply exceeds demand, prices will fall.

A suburbs Boom Score is the ratio of demand to supply for property.
The greater the score, the greater the chance of imminent price rises.

A low Boom Score indicates there are few buyers for number of properties available to purchase. The ratio of demand to supply is therefore very low and prices are likely to fall.

Boom Score 12/100 means low demand

A Boom Score of 12/100 means low demand relative to supply

Boomscore supply and demand graph

A Boom Score of 50/100 means demand meets supply

A balanced Boom Score suggests there are equal number of buyers relative to the number of properties available for purchase. The ratio of demand to supply is therefore 'balanced' and prices are likely to stay where they are.

A high Boom Score suggests there are more buyers relative to the number of properties available for purchase. The ratio of demand to supply is therefore high and property prices may rise.

Boomscore supply and demand graph

A Boom Score of 83/100 means high demand relative supply

9 Market indicators used to calculate the ratio of demand to supply

Boomscore generates multiple indicators of demand and supply for units and houses.
Millions of data points are harvested from reputable, publicly available property data sources then cleaned, collated and finally washed through the Boomscore algorithm.

ONLINE INTEREST

The number of pageviews for each property listed for sale on the property portals. The more pageviews the more people showing interest and therefore the more demand for property. 

PROPORTION OF RENTERS

The lower the number of renters in the area the more demand there is relative to supply from incoming tenants. Also, more owner residents help keep values up as they look after properties better than landlords.

MARKET ABSORPTION RATE

The ratio of total sales for the month to the number of new properties advertised for sale. An absorption rate above 20% signals a seller's market in which homes are sold quickly.

DAYS ON MARKET

The number of days a property takes to sell after being listed. If it sells fast this is a good indication of demand.

AUCTION CLEARANCE RATE

The number of properties that sell at auction as a percentage of all properties auctioned. A high ACR indicates lots of demand.

STOCK ON MARKET % 

The percentage of all properties in a suburb that are for sale giving a strong indication of supply.

GROSS RENTAL YIELD

The rental income as a percentage of property value. If this is high it can lead to price increases as potential buyers will value the higher rental income.

VENDOR DISCOUNTING

The average discount given by the seller compared to the original asking price. The lower the discount the more demand competing for property in the area.

VACANCY RATE

The percentage of properties available for rent. When this is low, tenants compete which pushes rents up and subsequently prices too.

Benchmarking the indicators

Each of the 9 property market indicators are benchmarked against what is regarded as a balanced market.

For example, it is generally accepted that a 3% vacancy rate indicates a balanced market. A 0.5% vacancy rate will likely see rents increase due to low supply and subsequently prices increases as more investors buy to capture these high yields. If the vacancy rate is very high then prices will drop in line with rents.

If the Vacancy Rate is:

0.5%

Demand exceeds Supply

If the Vacancy Rate is:

3%

The market is Balanced

If the Vacancy Rate is:

5%

Supply exceeds Demand


Boomscore's secret sauce: the relative importance of each indicator

Boomscore's algorithm applies a weighting to each of the indicators depending on their level of impact capital growth.
This weighting is our secret sauce and cannot be divulged here. What is important is Boomscore assesses all indicators in combination to ensure consistency between their readings. For example, if one property was for by auction and it sold at auction, the Auction Clearance Rate would be 100% which implies a market in high demand. If the property did not sell at auction then a 0% auction clearance rate would imply there was low demand for property in that market. In this case, we can still rely on all the other indicators combined to generate the summary Boom Score for the location.

TIP

Never rely on one of the indicators in isolation when analysing the investment potential of a location.

Monitor market data trends with Boomscore

Viewing the data for a location at a point in time is powerful.  Viewing the trends over time can be even more insightful. For example, the two suburbs below had the same Boom Score at a point in time, however, their respective trends are different. 

 One suburb is a potential 'SELL' and another is a potential 'BUY'.

Was that opportunity knocking?! 

A tale of two suburbs

boomscore property market data trending down

SUBURB B : Boom Score is declining over time. This could be a 'sell' indicator.

Two suburbs with the same Boom Score at a certain point in time. Same Boom Score, but very different opportunities.

boomscore property market data trending up

SUBURB A : Boom Score is improving over time. This could be a 'buy' indicator.

Two suburbs with the same Boom Score at a certain point in time. Same Boom Score, but very different opportunities.

boomscore finding emerging hotspot

INVEST BEFORE PROPERTY PRICES RISE

The holy grail of investing: Get in before the rest do and see maximum return on your investment (aka capital growth) when prices subsequently go through the roof. A high Boomscore generally means a location's prices may rise. But remember that the trends in the property market data give us a more accurate picture of WHEN to invest and WHERE to invest for maximum price growth. It's always possible to find a high growth market in any property market cycle, and Boomscore continues to outperform experts in doing this.

Boomscore no go zone example

KNOW WHICH AREAS TO AVOID

A 'no-go zone' suburb is a suburb where supply way exceeds demand and the trend in the property market data suggests it's unlikely to get better soon. Developer's pay huge commissions to offload properties in these oversupplied areas ... so beware.

Hotspot Finder (a Boomscore feature) filters out 99% of 'bad' to just 'good' suburbs and leaves you with the very best to analyse ... in 4 clicks.

boomscore favourites feature

COMPARE THEN PICK THE BEST

Too many options making you confused? Not ready to invest just yet? We have this problem all the time here at Boomscore ... that is, too many good locations to choose from. No problem - shortlist and compare all the suburbs you like then strike when they move from 'good' to 'great' (or sell if the opposite occurs).

Boomscore spidermap

A PICTURE PAINTS A THOUSAND WORDS

Not everyone loves rows and rows of property market data. It can be mind boggling and hard to assess for 'visual people' like Boomscore's founder, Michael. Boomscore's Spidermaps make it easy to visually determine a suburb's potential. Read more.

Discover Boomscore's Tools

>