THE POWER OF BIG DATA TO PREDICT CAPITAL GROWTH
Boomscore 'grabs' millions of property data points from 9 reputable sources
Boomscore, the suburb research tool, finds, collates and analyses various public sources of highly regarded property market data that together gives this free capital growth calculator's algorithm millions of 'supply' and 'demand' data points to then begin its work. Doing this work manually is almost impossible and most certainly unreliable.
Australia's first capital growth predictor for over 15,000 suburbs uses powerful algorithms to crunch over 1,000,000 property data records per month. This ability to make sense of 'big data' gives everyone, regardless of experience or budget, the power to invest successfully. Our algorithms are continuously fine tuned using Artificial Intelligence with our chief data scientist having patents in various fields of data science and data engineering.
Our Modelling Approach:
The modelling approach adopted to create the capital growth predictions uses the following 7 steps.
- Explore multiple variables in search of those that show a clear ‘demand’ or ‘supply’ relationship with residential property at the suburb or more focused level
- Once our key variables are identified, we access data from multiple sources collecting as much raw data as possible
- Clean, aggregate and transform data within our data model to ensure accuracy, stability and reliability of the future data outputs
- Perform a monthly data run to produce suburb level predictions for both house and unit property types
- Ongoing back-testing of predictions against actual performance to test reliability
- Continued testing of new variables to improve the data model and future capital growth predictions
- Introduce any new variable, if proven viable, to the overall data model to increase forecasting accuracy
There are currently 17 market variables being used to derive our current forecasts.
Our Forecasting Methodology:
Whilst being closely protected intellectual property, a simple way to explain it is that each variable within the overall model is given special weighting, a bit like the well-guarded secret formula of Coca-Cola or the secret herbs and spices recipe of KFC.
Our data model performs a vast series of calculations using our proprietary algorithms to derive a prediction each month for locations across Australia for both house and unit markets. These forecasts are broken down into one-year, two-year and three-year capital growth predictions.
In addition to the capital growth predictions, we also supply other useful information about the suburb in an interactive report platform for the user.
CALCULATE CAPITAL GROWTH POTENTIAL
Boomscore's algorithms calculate the ratio of demand to supply against 8 market indicators...
TOP SECRET FORMULA
Each of the 8 supply-demand indicators is given a different weighting depending on it's impact on market. This weighting ultimately determines their impact on the overall summary Boom Score for a location.
The eight property market indicators of demand and supply are powerful on their own but Boomscore assesses all indicators in combination to ensure consistency between their readings.
For example, if Auction Clearance Rates in one location were 90% (high demand) but there were large discounts provided (vendor discounting) then this is inconsistent. Why would a seller need to discount in a hot market?
We collect data from multiple sources, clean, aggregate and then run the data through our back-tested models to ensure reliability and accuracy.
BENCHMARKING
The relative importance of each capital growth indicator in Boomscore
Each indicator has a 'balanced' reading that implies the market is balanced ie. supply = demand.
For example if a location's Vacancy Rate is 3%, it is regarded as a 'balanced' market: there are enough tenants around and enough rental properties for rent.
Boomscore either 'rewards' or 'penalises' a suburb's overall Boom Score depending on how far from the benchmark each of the 8 statistics are.
For example, a suburb with a 0.05% vacancy rate is given a higher overall score than a suburb with a 5% vacancy rate, for example
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 algorithm tests each indicator against known industry benchmarks before generating a final Boom Score out of 100. The greater the Boom Score, the more likely a suburb will outperform a comparable suburb with a lower score. This allows investors to pinpoint the very best locations to invest in for imminent capital growth and, therefore, property investment success.
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 Boom Score 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.
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.
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's 'Spidermaps' make it easy to visually understand complex property market data
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.
Monitor market data trends with Boomscore
To illustrate how important it is to view ALL the stats for ALL 15,000 Australian suburbs in combination and side-by-side, and also why to monitor the TRENDS in the data, here is a tale of two suburbs:
... Same Boom Score TODAY but with very different property market data trends.
... One suburb is a potential SELL and another is a potential BUY.
... Was that opportunity knocking?!
Again, doing this work manually is almost impossible and most certainly unreliable.
Two suburbs with the same Boom Score at a certain point in time. Same Boom Score, but very different opportunities.
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Boomscore provides a handy way to identify the country's hottest suburbs without spending countless hours searching, sorting and analysing vast amounts of property information. Boomscore is also a property market research platform that connects investors with pre-vetted, highly researched investments.
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