What is The Demand to Supply Ratio ?
The DSR provides a handy way to quickly identify the country's hottest suburbs without spending countless hours searching, sorting and analysing vast amounts of property information.
The DSR measures the gap in supply and demand for units and houses in an area. The higher the score the better the chances of imminent capital growth.
The DSR compares 15,000 suburbs against 8 leading supply-demand indicators:
Each suburb is given a summary score between 0 and 100 with 50 representing a market in theoretical balance i.e. where supply meets demand.
Investors are encouraged to search for suburbs with a score of 70+ for an optimum mix of growing demand and some restriction in supply.
The DSR can provide a snapshot of a suburb’s statistical credentials or help investors cherry-pick a shortlist of potential suburb hotspots based on their personal requirements.
DSR between 91 and 100 is EXTRAORDINARY
Buyers are absolutely desperate in this market.
They frequently make offers above the asking price. Buyers line up at open inspections and auctions are a full house. This is not a market for the faint-hearted; buyers must be very aggressive and very fast. Sellers can't believe how much they're getting and real estate agents can't get enough stock to sell.
DSR between 82 and 90 is EXCELLENT
Some buyers are desperate and sellers are licking their lips.
Properties in this suburb are highly desired by buyers but there are very few available. They have to act fast and make strong offers to get their foot in the door. The few sellers are receiving many strong offers. The imbalance of demand and supply will drive prices in the suburb higher at a fast rate.
DSR between 73 and 81 is VERY GOOD
This is a sellers market. Buyers will need to move quickly.
There is strong demand from buyers yet not enough properties to give them time to be choosey. Sellers do not have long to wait before they receive a healthy offer. Prices are being driven upward. Expect good capital growth in the immediate future.
DSR between 64 and 72 is GOOD
Sellers are in no panic and buyers are making decent offers.
This is a healthy market for investors. Demand is ahead of supply but not alarmingly. Buyers are rarely able to get away with low-ball offers. Sellers are usually getting the prices they ask for. Expect growth to exceed the national average.
DSR between 55 and 63 is ABOVE AVERAGE
Demand just outweighs supply in this market.
This is a healthy market for investors wanting to apply some value adding strategy. Buyers are sometimes able to get away with low-ball offers. Sellers are getting the prices they ask for more often than not. Expect growth to marginally exceed the national average.
DSR between 46 and 54 is BALANCED
This market is balance with repect to supply and demand.
There is a healthy count of properties for sale compared to the number of interested buyers. There is a closely fought tug-o-war between buyers and sellers. Sellers may get away with a good price if they find a poorly researched buyer. Buyers may get a good price if they find a seller who wants a quick sale. Prices should grow in line with the national average.
DSR between 37 and 45 is BELOW AVERAGE
Supply just outweighs demand in this market.
Sellers need to be realistic. It is a little better to be a buyer than a seller in this market. Buyers can afford to ignore sellers who are not negotiable. Sellers will have to wait to get the price they want. There is little driving capital growth so expect prices to remain flat or increase a little slower than the national average.
DSR between 28 and 36 is POOR
Buyers are few and hesitant while sellers are keen to offer them incentives.
There is some interest from buyers but there are few of them and they can afford to be choosey. Sellers are happy if they get an ordinary offer and are often prepared to accept inconvenient terms just to get a sale. Prices will probably remain flat if they do not actually drop.
DSR between 19 and 27 is VERY POOR
'For Sale' signs are gathering dust.
Buyers are treated like royalty in this over-supplied market. Some sellers panic, desperate to offload. Buyers can negotiate.
DSR between 10 and 18 is APPALLING
Buyers are nowhere to be seen.
There is virtually no one willing to buy. Some sellers resort to extreme tactics, desperate to offload, but few do. Buyers can negotiate ruthlessly and still get what they want. Bargains are everywhere. Expect strong negative capital growth.
DSR between 0 and 9 is DISASTROUS
A property investor's disaster area.
Sellers are absolutely desperate to sell at almost any price. Something has gone horribly wrong with this location and there are many owners caught holding a lemon. Expect prices to fall fast.
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Using supply and demand to score property investment potential