Are you stuck trying to decide exactly when and where to invest in property? Days on Market statistics may be your answer.
Don’t worry, you're not alone in trying to pick the best locations from over 15,000 suburbs countrywide. There are countless stories of property buyers finding their property market research overly time consuming and (after fighting off the biased property spruikers) they buy on emotion, only to regret this later, as their portfolio stalls on one or two properties and costs them each month in negative gearing.
But there is a different way to pick the best areas for your budget using a proven method that relies on hard facts and very smart data-driven research technology.
It all starts with 8 powerful property market indicators that, together, calculate the gap in supply and demand (and therefore capital growth potential in every suburb) for you so you can get back to spending time with your friends and family knowing your property investment portfolio is working hard for you and not the other way around.
Let’s examine one of these 8 powerful property market indicators: Days on Market.
(You can read the whole blog series by using the links in the adjacent '8 Supply-Demand Indicators' block)
9 CAPITAL GROWTH INDICATORS
What is Days on Market?
Days on Market is the average number of days a property takes to sell. That’s the number of days from when it is listed for sale until the time it is recorded as sold.
If property is selling fast in a particular suburb, then this is a good indication that there is a high demand for properties in that area. The lower the Days on Market figure (i.e. the quicker property sells), the higher the demand for property. And the higher the Days on Market figure (i.e. the longer it takes to sell), the lower the demand for property.
If properties are selling quickly, then buyers are keen to buy in the area and sellers may be able to achieve higher sales prices and this pushes property prices up.
In some cases you can see a correlation between Days on Market and another indicator called Vendor Discounting (the difference between the initial listing/asking price and final sale price).
Where you can get Days on Market stats
There are various online sources of Days on Market data such as Corelogic and property websites.
Collating and comparing this data for 15,000 suburbs is obviously a challenge even for the Excel spreadsheet data scientist in all of us.
Of course, we have made this easy for you with our suburb research tool, Boomscore! Check the Days on Market for 15,000+ suburbs split by units and houses in Boomscore’s Suburb Profiler. Who knows, if all the other indicators support a low Days on Market figure, then you may be the first to spot a suburb set to Boom.
BOOMSCORE - BIG DATA & ARTIFICIAL INTELLIGENCE (AI)
Big data and AI capability makes it possible for the Boomscore capital growth calculator to crunch the data for each of the 15,000 Australian property markets. A task few could do manually even if they knew how. Boomscore simply means you can now find safer locations where prices are most likely to increase faster. Over the past 10 years, Boomscore’s data algorithms have outperformed the ‘hotspot’ picks of some of the more recognised property market research gurus. In fact my (then) 6 year old daughter showed them how easily it’s done using just a few clicks on Boomscore (read how).
Boomscore rates every suburb (by house or unit) out of 100 based on how they perform across the 8 supply-demand indicators in this series. The higher the Boomscore, the more demand exceeds supply, which greatly increases the probability of property value rises in that location for that property type. Get Boomscore.
But be careful with Days on Market ...
Remember that properties sold ‘off market’ (i.e. not formally listed) are not included in Days on Market statistics, so this can skew the stats. Also the estate agent might forget to take the property offline after it has sold, pushing out the Days on Market timeline… or buyers may switch real estate agents if they are battling to sell and relisting can distort data.
Each suburb will also have its own profile - for example, more expensive properties tend to move more slowly, so it’s important to focus on the trends in the data over a long enough timeframe for your chosen suburbs, to make sure you are not buying in an already hot market. And when the time it takes to sell a property (Days on Market) declines over time, this trend could be an indication that demand is increasing relative to availability (supply) of properties for sale.
In closing ...
Property prices, and therefore capital growth potential, are influenced by a number of factors. If you understand these factors and how to work with the capital growth indicators available to you, then there is no reason why you can't find the best investment locations to suit your strategy.
There are 15,000 suburbs in Australia - that’s 30,000 property markets (if you take into account the Unit and House markets in each suburb). Despite what the macro property market is doing, there are always viable micro markets out there… and it may come down to one particular street in one particular suburb. In order to find these nugget suburbs you need to compare the data for all 15,000 suburbs (and 30,000 markets) against one another to rank order them and let the cream of the crop float to the surface. And to crunch the numbers you need to have a good understanding of the importance of the data and how to work with it to find or track your chosen suburbs.
If any of our blogs on the subject have peaked your interest, you can download our Free Essential Guide to Property Market Research, or attend our in-depth (but affordably priced) online property research training course (coming soon ~ register your interest now!). And we encourage you to use Boomscore, our tried and tested suburb ranking tool to get you started.
Read next blog ... Auction Clearance Rate.