Jeremy Shepherd: Location Score

Hi, a few months ago I bought this software called LocationScore.com.au which was marketed through Empower Wealth ( Property Couch).
I was wondering if anyone here has looked at it and what your thoughts may be about its benefits etc.
It's main objective is to pull together about 8 pieces of data and then determine the capital growth indicator for each suburb.
It's a short term view of the level of supply and demand of each area which I understand.
I'm still to learn and understand the whole thing and the only thing Im struggling to get my head around is purchasing in an area that already shows extreme high demand. It makes me think that I've already missed the boat. Areas that are showing up as hot include Newcastle and Central Coast, East Maitland, Canberra, Hobart, and parts of Melbourne, with Adelaide doing better than Brisbane.
Jeremy Shepherd, the brains behind the software was asked why you wouldn't invest in a city which performed poorly in the data (Perth in this case) and he replied that while Perth has stopped declining it could stay flat for many years to come and this was not good for investors wanting to build their portfolio.
Anyway just some thoughts, people might like to comment.

 

I used Jeremy's website as a free user prior to him joining with Empower and charging for the data. You can get virtually the same data for free at boomapp.com.au. All i used it for was to see where a market is currently as that is all it tells you. I think it's really accurate for this. It helped me when negotiating to see what i am up against ie market conditions. It could also be useful if you are sellilng and want to sell when demand is high. However i don't see how it can predict growth suburbs any further out than a few months. In fact, the score had Sydney at super high demand at the peak of the market last year, so had you bought in Sydney at that stage it would have been a poor decision. Read this website extensively and you will get a really good idea of where locations are at in the cycle and where the next growth suburbs are. And it's free.

 

Thanks Todd, it's what my thoughts were as well.

 

nice thanks for this

 

I agree, it tells you current state more than future.

 

The highest average demand to supply ratio for Sydney's last boom was 73. It was reached in Mar-May 2015. You would NOT have been buying at the peak then. But you would have been better off buying sooner, before the DSR rose above 70.

Over the 2 and a half years from May 2015, Sydney had over 20% growth. By January 2017, the Sydney average DSR had come down from 73 to 61.

By around the same time, the Hobart avg DSR had risen to 71 replacing Sydney as the top significant urban area by DSR. Over the next 2 and a half years Hobart had over 20% growth while Sydney had marginal negative growth. Growth didn't start in Hobart until 2017.

Growth peaked in Sydney by January 2018. The demand to supply ratio had already dropped for Sydney and was replaced by Hobart in early 2017.

The DSR does not pick the peak of the market, but it does have a short outlook. We don't predict property prices further than 3 years into the future with any real confidence.

An imbalance in demand to supply "right now" indicates change must happen "in the future" to restore balance. A high DSR is actually a "lead" indicator of growth. It does NOT indicate the price peak of the market.

 

BTW, you do not get the same thing at Boomapp. I have no arrangement with them. We do not provide data to them. It is a cheap attempt to imitate the DSR as a lead generator for marketing developer projects.

We do not get any kick-back from any developer. We only make money from providing data and data analysis services.

 

No one has a crystal ball, however I personally believe that dsrdata is going to get you 70% of the way there in terms of picking a good suburb likely to outperform the average. Caveat here is you need to know how to use the tool and you also need to supplement it with other tools (unless you fork out extra $$'s for dsrdata pro). @datageek - any progress on implementing a developable land calculator and integrating details on what building approvals have taken place in the area over say the last 18 months?

 

No development data yet, sorry. However, there is a workaround...

I use Google Maps Street View and Satellite View. If there is significant vacant land that could be developed, I steer clear.

This only works for houses. Units is a lot trickier - which is one of the reasons I avoid them.

We have an "Infill Risk" metric (not published yet) that scores a suburb for whether it is likely to have High/Low risk of infill (i.e. land developed). It doesn't mean there are developments, just the potential for them. It's more of a long-term risk thing.