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

In the case of Camden, 3 suburbs are coloured red due to low sales activity in these markets. Capital growth for these suburbs is defaulted to 0%. This is done so as to highlight markets with low confidence data on the heatmap. Suburbs with no sales activity do not feature on the map at all.

The spill over heatmap has a scale of growth, which highlights the colouring associated with YoY growth percentage. For example, the green and light green areas have experienced 7-15% YoY growth.

Spill Over Heatmap for Camden Suburbs
Lighter shade of green suburbs are candidates for growth spill over

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 green areas on the spill over heatmap are ahead of other suburbs in terms of growth. It is possible that the lighter shade of green 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 clicking on the “i” marker, you can find out:

  • suburb typical price
  • YoY capital growth
  • number of sales this quarter

You can also switch from houses to units by clicking on the ‘unit’ button in the top right-hand corner.

Spill over analysis for Camden suburbs
Suburbs with low sales volume default to 0% growth

Scatter Maps

Switch to the scatterplot view for a more detailed assessment of the market by way of identifying activity clusters within a suburb. The concentration of sales can delineate high demand sections.

You can switch between spill over heatmap and scatter plot to ascertain suburbs with the highest capital growth and the most market activity.

Scatter-plot of house sales in Camden Council
Scatter-plot of house sales in Camden Council

Camden LGA scatter plot indicates higher activity in suburbs such as Narellan Vale, Spring Farm, Harington Park and Oran Park. This corridor is well-positioned for growth.

Furthermore, by enlarging the scatter plot, investors can ascertain levels of activity at the street level, delineating streets dominated by higher demand profiles for a particular dwelling type. This provides an opportunity to make decisions with reduced levels of risk and focusing not only on most in-demand locations but also on particular property types.

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.

Demand Profile for Camden Houses
3 and 4 bedroom houses are in most demand

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 and pages 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 a scatter-plot. The combination of the 2 charts provides a more focused view of demand concentration.

Notwithstanding this, we created each page and feature 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.

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