Visualising Spill Over Effect and Property Demand Profile

In this post we will provide an overview of the last 2 tabs on LGA pages. The last 2 features allow you to:

• visualise possible growth spill over between suburbs via an interactive heatmap
• establish most in-demand dwelling types within a council area.

To recap, in part 3 of our blog series we highlighted the benefits of Growth Rate Cycle (GRC) feature. Spill over heatmap is a different way of presenting the GRC information. It permits to look for market boom (and bust) spill over relationships between suburbs and find potential growth clusters.

Identifying the geography of growth allows investors to pick and choose high investment-grade suburbs respective to their current financial circumstances. This means that a long-term investor can potentially opt for suburbs with lower prices and rates of growth. At the same time he or she can comforted by the fact that these suburbs form part of a broader growth cluster.

Spill Over Heatmaps

The spill over heatmap has a scale of growth, which highlights the colouring associated with YoY growth percentage. For example, the dark blue areas have experienced up to 25% YoY growth.

The spill over paradigm can occur at different levels. One common pattern in Australia is when capital city markets boom, followed by spill over growth in regional areas. Similar pattern of growth can occur between suburbs within a Council Area.

We can see that the darker blue areas on the spill over heatmap are ahead of other suburbs in terms of growth. It is possible that the lighter shade of blue suburbs are lagging behind. You can explore these suburbs further and bench-mark them against all criteria we covered off in part 1, part 2 and part 3 of our blog series.

By rolling over a suburb, you can find out:

• typical price
• past year capital growth
• number of sales
• median rent
• number of rentals
• gross yield

You can also switch from houses to units by clicking on the ‘unit’ button.

Tying in Spill Over Heatmap with the Demand Profile

The most obvious benefit of using the Demand Profile tab is to ascertain which type of dwelling is in most demand within the LGA.

There is also a not so obvious benefit of using the demand profile chart to do with assessing ‘investability’ of individual properties. Utilising the number of bedrooms view, an investor can ascertain the investment grade of any particular property in terms of capital growth forecasts for properties of similar composition.

For example, if 4 bedroom houses are most in demand, you can explore forecast charts for this particular dwelling type.

In summary, the demand profile tab permits investors to minimise the risk of purchasing idle properties by providing information on which dwelling type is most in demand. Furthermore, it also assists in ascertaining whether a specific property is overvalued thus helping them not to overextend at property auctions.

Conclusion

Overall, it is important for every investor to consider all features on the platform in unison. As it was evident in this blog post, a spill over heatmap alone is not as useful as when combined with time-series charts.

Notwithstanding this, we created each metric and graph on the platform to satisfy a particular investment need.

However, before starting on a feature exploration, an investor needs to understand his or her personal finances and have a clear strategy in mind. This will have an impact on what meaning is extracted from each feature or a combination of features.

Although this might sound daunting, it is not. It simply states that an investor should:

• know how much they will spend on property investment
• have a strategy in mind which will guide them in considering some areas as opposed to others

Once you satisfy the key strategy elements, HtAG platform will help investors simplify their property journey. In the process of bench-marking councils and suburbs based on a particular criterion, the platform will also educate investors.

Overall, we believe property investment should be simple, fun and rewarding.

Have a question? Leave it in the comment section below.