RO Ratio

  • This topic has 3 replies, 3 voices, and was last updated 1 month ago by Ken.
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    • #27994
      Daniel Smit
      Participant

      Hi

      If the RO Ratio for example shows 33/67, does that mean there are 33 renters and 67 owner occupiers?
      I’m asking because your Data Dictionary shows it slightly differently :Unfavorable 45-100, Neutral 15-45, Opportune 0-15.

      Would that mean that 33/67 is unfavorable? If I understand this correct almost 50% of the suburb is made up of renters and this is unfavorable? Please explain

      Thanks

    • #27995
      investingme
      Participant

      Someone from HTAG can confirm it. But I believe 33|67 is 33 which is Neutral.

    • #28022
      Ken
      Keymaster

      Hi Daniel,

      RO Ratio represents the balance between Renters and Owners. The metric is displayed as a proportion of Renters|Owners.

      In your example of 33|67 there will be 33 renters vs 67 owners for every 100 dwellings in that particular market.

      The ranges in the data dictionary are given for the Renter portion of the scale. There are 33 renters in your case which falls into the 15-45 range and is classified as Neutral market.

      We’ve updated the data dictionary so that it’s clear that the range is for Renters.

      To clarify further, the starting point should be to shortlist suburbs by filtering out Unfavourable, Low Demand and High Supply markets. The resulting list is then up to you to work through by applying additional filters based on metrics of your choice, whilst also gauging the potential Capital Growth and ROI based on provided data.

      The more metrics fall into the Favourable / High Demand / Low Supply band for a particular market, the more likely it is that Capital Growth will be towards the high range of the forecast. Please also be mindful that Neutral/Balanced markets frequently provide great outlooks and should not be discounted.

      I’d also like to call out that the data dictionary ranges are ballpark bands and there will always be fringe cases of suburbs that are just outside of the Neutral/Balanced band. For example if a suburb has 46 renters, we recommend assessing all other metrics to see whether they also confirm unfavourable conditions of that market.

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