Are you stuck trying to decide exactly when and where to invest in property? Stock on Market Percentage 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... And it’s free.
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… Stock on Market Percentage.
(You can read the whole blog series by using the links in the '8 Supply-Demand Indicators' block)
8 CAPITAL GROWTH INDICATORS
What is Stock on Market Percentage?
Stock on Market Percentage is the percentage of properties for sale in a particular area as a proportion of the total number of properties in that area. For example, if there are 900 properties in a particular suburb and 10 properties are listed for sale then the Stock on Market Percentage is represented as 10 / 900 X 100 = 1.1%.
The lower this percentage figure for a suburb, the less properties are for sale in that suburb as a proportion of the number of properties in the area. A low Stock on Market Percentage means that properties are tightly held by owners and snapped up by buyers when they do come on the market. This relatively higher demand may push property prices up and of course that is good news if you have bought into the area before the growth.
Where you can get Stock on Market Percentage
The property portals and Australian Bureau of Statistics (ABS) data can help you determine how many properties are for sale (stock on market) and how many properties exist. 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 free suburb research tool, Boomscore! Check the Stock on Market Percentage for 15,000+ suburbs split by units and houses in Boomscore’s Suburb Profiler. Who knows ... if all the other indicators support a low Stock on Market Percentage, 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 Boom Score, the more demand exceeds supply, which greatly increases the probability of property value rises in that location for that property type. Get Boomscore Free.
But be careful with Stock on Market Percentage ...
If a new development in the area is about to complete, you may find, for example, 30 new units or home sites coming onto market. In a location with only 300 properties and only 15 for sale, suddenly the Stock on Market Percentage goes from 15 / 300 x 100 (5%) to 45 / 300 x 100 (15%). That’s a big leap which could see prices of older properties potentially drop… and as investor, you don’t want that.
Check the local council planning portal to find out how many properties are likely to enter the market in your chosen suburb/s. Verify that the listings on the property portals (i.e. Stock on Market) is a true reflection of the number of properties for sale.
- Are some of the listings out of date and, therefore, the stock on market higher than in reality?
- Do the other 8 supply-demand indicators suggest the Stock on Market Percentage is accurate?
For example, if the Stock on Market Percentage is very low but the time it’s taking to sell (i.e. Days on Market) is very high, then there is an inconsistency.
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 Ultimate Guide on How to Find Super Profitable Areas to Invest with Scientific Accuracy using Data Driven Insights, 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 free tried and tested suburb ranking tool to get you started.
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