There are over 15,000 suburbs in Australia and over 350,000 properties for sale and only 1% of these suburbs will produce market beating capital growth.
This blog introduces the free technology over 13,970 investors have been using to pinpoint the best growth suburbs with remarkable scientific accuracy.
You'll discover how my very own daughter used this technology to pick her own short list of suburbs in Jan 2014....suburbs that subsequently averaged 40.97% in capital growth (to be accurate...40.97% increase in median price).
She was six at the time...
...and she beat the property market average by 26% for the same period.
.... so this technology is clearly easy to use as you will see below....and fast
...no more "I'm too busy" excuses 🙂
Also, be sure to download the free infographic that will show you what is behind this technology...how each suburb in Australia is measured on very objective supply and demand indicators to ultimately calculate their 'capital growth score'... a.k.a. The DSR BoomScore™
In my previous blog I gave you a free one page Cheat-Sheet: ‘8 Signs A Suburb’s Property Prices Are Set Soar’ (or hit the floor) … a handy infographic of the process my six year old daughter, Olivia, used to pick her own shortlist of investment hotspots in 2014, that two years later had grown in value on average 40.97% for houses and 32.82% for units. (The Australian market on average had only grown 12.33% for the same period.)
This blog illustrated the power of property data as an objective measure of where to invest and why.
Understanding what data can be used to measure supply and demand for each suburb, and then using that as a basis for picking a list of suburbs for greater research, is much more efficient than trying to do ‘deep dive’ research on every suburb in Australia.
Firstly, that would be impossibly time-consuming to individually assess and rank all 15,000+ suburbs in Australia, and secondly, all research is only valid for a short time so you would have to be super quick.
Would you make a decision to buy based on research that is 12 months old? In a slow market, that might work. But when a market is on the upturn (the best time to buy) you want to be quick footed and act with confidence.
The reality is the data moves first, and then the media headlines follow.
Look at some of the mining towns in 2015. Those that responded to the decline in data late, and waited for the media headlines to get them moving, are regretting it now. Just Google “Moranbah property downturn” and you’ll see what I mean.
So the investor who has the data … tracks it … and responds in a timely manner, wins. It’s that simple!
If property cycles average 7 years in length. Most of the capital growth occurs in the last 2 years. Timing is everything – both buying and selling.
And when a market is heading south, selling ahead of other investors is crucial (depending on the location dynamics). [Note: regional markets tend to fluctuate in price more so than capital city markets.]
Now let’s be clear …
My daughter, Olivia, did not spend weeks and weeks trawling more than 7 websites (like these pictured) gathering property data to gauge supply and demand.
She also didn’t spend vast time and skill collating the 8 property stats (pictured) required to calculate the ratio of demand to supply for over 30,000 markets. That’s 15,000 suburbs, by houses and units, in order to produce her winning suburb predictions.
Using Hotspot Finder in Boomtown
She asked the Hotspot Finder feature to give her a list of all suburbs based on:
- A DSR (Demand to Supply Ratio) BoomScore range of 30 to 48, which brought back over 500 results (suburbs mixed with houses and units).
- She could have narrowed the search by State or
- She could have narrowed the search by Price range (to match her budget) and/or
- She could have narrowed the search by a combination of houses only or units only.
The DSR BoomScore™ ranks a suburb between 0 and 48 based on it's potential for imminent changes in prices based on the gap in supply and demand.
- 48 suggests a suburb with a high probability of imminent capital growth.
- 24 is a suburb in theoretical supply-demand balance.
- 0 is a suburb with a high chance of price decline due to over supply relative to demand.
The result was a list of 65 possibilities, which could then be sorted by their DSR BoomScore™ from highest to lowest.
This is the exact process she used to generate her annual hot suburb list that has beaten the experts’ predictions year after year. Her 2014 suburb predictions grew in value by a massive 40% in two years. An independent data analytics company audited the results, so it’s not just us blowing our own trumpets!
But there’s a catch … well sort of …
What’s the point of getting an average 30% or 40% growth in median values across 50 suburbs? That would work nicely if you owned every house in all 50 suburbs. But most of us are realistically aiming for the 6+ investment properties the ATO says we need to retire financially well off.
With limited funds, isn’t it better to buy the best house … for the lowest price possible … on the best street?
You see, the property data is only representative of the average property in a suburb.
If a suburb grows by 20% in one year that means the average property price in the suburb has increased by 20%. Your property might grow by 30% because it’s better than average.
So as you can see, the magazine lists are very good but you still need to be able to pick a suburb that meets your criteria particularly when you have a budget in mind and a particular strategy.
Searching the data behind these lists is not currently available so whittling 50 suburbs down to 10 super suburbs is challenging. Conducting detailed research on 50 suburbs is not practical either.
Unlike Olivia, who in 2014 generated a list of 50 suburbs based solely on their capital growth potential (i.e. DSR BoomScore™), you may need to refine the search a bit more.
- What if your budget is $700,000?
- What if you want to buy a property, renovate it and sell on completion?
- What if you are targeting owner-occupier buyers?
You would still use Boomtown to search 15,000+ suburbs ….
You could choose a particular State or location if you would like to be hands on and need to be nearby. In this case, you might check the stats on 10 suburbs within 20 kms of your residence.
You’d set the filters in ‘Hotspot Finder Advanced Search’ as follows:
- Choose advanced search.
- Apply the basic filters for state, price range, units or houses.
- Then customise the search by underlying statistic:
- Days on market – you want properties to be selling quickly so you get a buyer immediately on completion.
- Stock on Market – you want a decent level of stock available so you can find a property to renovate. Demand must be high to absorb this stock.
- Vendor Discount – this should be low because you do not want to be discounting to get a sale on completion.
- Online Search Interest – there should be a lot of people searching for properties in this location.
- Renters vs. Owners – you want sufficient owner-occupiers in the area because you are not selling to landlords. If you were renovating to hold then you would want a higher proportion of renters ready to move (supported by low vacancy rates and high rental yields).
You’ll find your search will filter out 80% of the suburbs that might make the top 50 list on capital growth potential. You would then manually compare the remaining suburbs side-by-side and quickly get a feel for which ones you want to manually filter out.
In about 10 minutes, you would have checked the data from multiple sources across the internet including Domain.com.au and Realestate.com.au … for over 30,000 markets … based on YOUR budget and YOUR strategy.
If your strategy was as basic as ‘high capital growth with solid rental yields’ and you were prepared to dig really deep into the fundamental capital growth drivers for each suburb, you can be pretty certain you would beat my little expert Olivia, and not just the market average and all the experts.
But more importantly:
- You’ll have more time for the things that matter: family and friends.
- You’ll build wealth faster for lifestyle and giving.
- You’ll buy with greater confidence and piece-of-mind.
- You’ll be happier (successful people generally are).
And to think we’re just talking about these 8 signs a suburb is set to soar and a little free app called boomtown. But now that you’ve seen the proof, we’re confident they will change the way you conduct your suburb research for ever!
Don’t want to buy a property but want property developer profits without the work or experience?
Don’t have a deposit or the borrowing capacity? You’re not alone.
One option is to partner with a developer using your ‘lazy equity’ in, say, your SMSF or bank account or even equity in your home. We call it ‘lazy’ because it’s equity that is not growing in value. It’s not working hard for you.
Partnering with a developer and buying a share of the profits in a development in a location where the DSR BoomScore™ is favourable is a safer way to get much wider exposure across many markets. For as little as $5,000, you could spread your bets across multiple properties in multiple locations earning as much as 50% cash returns … without the hassle of tenants and lack of diversification.
It’s known in the industry as ‘crowd funding’. In essence, like-minded investors, a.k.a. ‘the crowd’, vote with their dollars and choose a property or project to invest in. This compares with handing over your Super savings to a faceless entity that invests your money in … well … who really knows. You can choose, for example, a REIT (Real Estate Investment Trust) that then invests your money in ‘property’ but you have no choice on which property and where … and you pay dearly for this lack of choice. Crowd funding gives you access to a choice of actual properties that were previously not available to the consumer and in a very cost effective way. So you can spread your risks, and with returns of 20%+ it can be attractive.
Check out our recent blogs in this series.
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