Supply and Demand (realestate.com.au)

Discussion in 'Property Investment - Other' started by fitzy1903, 15th Jun, 2015.

  1. fitzy1903

    fitzy1903 Member

    Joined:
    22nd May, 2015
    Messages:
    10
    Location:
    Perth, WA
    When you click on the suburb profile within realestate.com.au, it gives you this "Supply and Demand in XYZ suburb."

    So there is a bit of a spiel about how it is calculated. I've included this as a link so you can go directly there:
    http://www.realestate.com.au/neighbourhoods/craigieburn-3064-vic

    It is a lagging indicator over the past 12 months, but I guess you could track it over a few months and see which direction it's going.

    Craigieburn it appears hasn't had strong growth over the past year and this analysis has a low amount of visits, therefore consistent. And I've also been following Montmorency which has 1635 visits and real decent growth over the 12 months. Therefore, the analysis appears to be getting it right.

    So does anyone use this information as part of their strategy on picking houses? Just wanting to see if someone uses this as part of their strategy and whether I should incorporate as part of mine...:)
     
  2. LeoT

    LeoT Member

    Joined:
    31st Aug, 2014
    Messages:
    887
    Location:
    Sydney, NSW
    HI fitzy,

    Cant say ive used that info myself. Generally what I use when deciding where to buy:

    1. Determine the state (looking for right part of a cycle, or thereabouts)
    2. Determine suburbs that have good growth drivers and fundamentals
    3. Purchase under market value most of the time.
    4. Purchase something that has room to add value.

    What makes me come to the conclusion as to where to go is a variety of sources: magazines, reports, specific suburb profile reports, seminars, knowledge sharing from colleagues and general market sentiment from the news. We can use the news to our great advantage :) There are also a host of indicators investors like to look at to further gauge market sentiment which all have their place, eg, SOM, %age discount, S/D equation.

    Don't only rely on 1 or 2 sources of information, that's extremely dangerous IMO.

    Personally, I've always found qualitative data more useful than quantitate at this stage of due diligence.

    Good luck!
     
    Last edited: 15th Jun, 2015
  3. fitzy1903

    fitzy1903 Member

    Joined:
    22nd May, 2015
    Messages:
    10
    Location:
    Perth, WA

    Thanks for the information mate. What's S/D equation and % age discount?

    Cheers,
     
  4. LeoT

    LeoT Member

    Joined:
    31st Aug, 2014
    Messages:
    887
    Location:
    Sydney, NSW
    Supply/demand equation.

    Current Percentage discounting for property. Tightening of discounting could mean the suburb is getting more popular, harder to get a bargain. If, a suburb for example has 20% discount... you gotta ask yourself why..haha but that's an extreme example.
     
  5. fitzy1903

    fitzy1903 Member

    Joined:
    22nd May, 2015
    Messages:
    10
    Location:
    Perth, WA
    Thanks mate!

    I was thinking standard deviation for s/d equation but couldn't think how that could be used within investment properties..haha

    Last question, where can you finding this analysis?
     
  6. LeoT

    LeoT Member

    Joined:
    31st Aug, 2014
    Messages:
    887
    Location:
    Sydney, NSW
    no worries mate.

    Well some of that can be found at the back of the API and YIP magazines. Its best to use in conjunction with other pieces of data of course.
     
  7. MIW

    MIW Member

    Joined:
    16th Oct, 2011
    Messages:
    927
    Location:
    North Shore, Sydney NSW
    As Leo pointed out I am look at more than that, since my strategy is for never to sell, add value via reno if possible, buy at below or market value, buy what is appropriate demographic in the area, as just some parameters...
    I also like to check CG for the area for the last 10 years, I use ABS for demographics if I wish to check for wage growth or population growth, or infrastructure projects, I may even Google the area to see what's happening there. In addition I use various materials, magazines, links to websites with demographic data, RP data, etc....
    So first I do macro level, I chose the state which hasn't boomed, then I will narrow down to suburbs with my criteria, then to streets, then to properties and so on... The place is never first on my list.
    But in your buying process John Lindeman talks a lot about leading and lagging indicators, and listings whether they are declining or increasing are important indicators, when combined with others to watch...
    Look no one will be the expert picking the perfect property, paying the perfect price, picking the perfect area, the perfect state, etc... but if we can at least meet few of those items on our criteria then hopefully we will buy well and minimise the risks!
    So buying is just one part of the process... knowing whether to hold on or to sell will come next. Like buying shares is easy but choosing when to sell may be harder.
     
  8. fitzy1903

    fitzy1903 Member

    Joined:
    22nd May, 2015
    Messages:
    10
    Location:
    Perth, WA
    Cheers for the information MIW.
    I might have to check out John Lindeman.
    When you say check out CG over the past 10 years, that's just consistent good growth over those years yeah?
     
  9. LeoT

    LeoT Member

    Joined:
    31st Aug, 2014
    Messages:
    887
    Location:
    Sydney, NSW
    IMO this is a little tricky and can be interpreted in a few different ways and also be misleading at times.

    If say the last 5 years growth indicates solid, consistent great growth, some ppl interpret it as a great area to buy into now and that the growth will continue. Other may see it as already missing out on most of the CG and decide to look elsewhere that hasn't had the spurt of great growth as yet. so IMO looking at past growth rates can be analysed in multiple ways, often giving conflicting messages depending on who is analysing it, their goals, strategies, approaches, level of risk tolerance.

    That's why its always essential to use various sources of data when trying to get a clearer picture.
     
  10. MIW

    MIW Member

    Joined:
    16th Oct, 2011
    Messages:
    927
    Location:
    North Shore, Sydney NSW
    Yes I agree, we cannot look at just one indicator, there are so many other multiples to consider, so I would never suggest just to look at CG alone, or say vacancy rate alone, or listings alone, or whether wages are rising in the area alone, etc.... Do you get the idea, it is never checking just one thing, we need to have combination of factors when selecting with our criteria!