We discover the 20 largest significant urban areas around Australia with Location Score.\u00a0 This App has the ability to look back and track where property markets have been to work out where they are going. \u00a0Jeremy Sheppard from Location Score explains how it works.<\/p>\n
Transcript:<\/strong><\/p>\n Kevin:<\/strong>\u00a0 Towards the bottom of the homepage on Real Estate Talk, you\u2019re going to notice a badge there for a product called Location Score. I want to dig a little bit deeper into this because there was a really interesting release that they put out this week that had a look at the 20 largest significant urban areas around Australia. Some great lessons coming from this and now that Location Score has the ability to look back a little bit and track where the property markets are going, we\u2019re getting some really good data.<\/p>\n Joining me to talk about this is Jeremy Sheppard, from Location Score, LocationScore.com.au and as I said, use the button on the homepage at RET to tell you a little bit more about it.<\/p>\n Jeremy, tell me about Location Score. How do you write these areas? What sort of data do you use?<\/p>\n Jeremy:<\/strong>\u00a0 The whole idea about it is supply and demand. We\u2019re trying to score supply and demand, so we\u2019re looking at things like auction clearance rates, vacancy rates, percentage of stock on market. That\u2019s obviously a very good indicator of supply.<\/p>\n We munge all of these statistics together into a single score out of 100, because that\u2019s just easier to digest. The higher the score is, the more demand exceeds supply, so it\u2019s that simple really.<\/p>\n Kevin:<\/strong>\u00a0 Let\u2019s have a look at one of the hot markets recognized around Australia, and that is the Sydney market. What have you noticed there, and what has Location Score picked up?<\/p>\n Jeremy:<\/strong>\u00a0 As the report shows, over the last few years, the Location Score has been steadily declining in Sydney. It was at a peak somewhere in middle of 2015,and since then, it\u2019s just been gradually coming back. And you\u2019d expect that; sky-high prices subdue demand like nothing else.<\/p>\n It\u2019s come back down from about 73 to 60, which is quite significant, but that was over about a three-year period. But that obviously reflects where the market is right now. We\u2019re seeing very low growth, if any at all, and that\u2019s because the demand has been balanced with supply.<\/p>\n Kevin:<\/strong>\u00a0 Speaking of balance, what would you score a balanced market at?<\/p>\n Jeremy:<\/strong>\u00a0 The theoretical balance point is a Location Score of 50 because it\u2019s scored out of 100. But what we\u2019ve found historically is it\u2019s probably around about 55. About 55 seems to be where the figures lie for a market that\u2019s in balance.<\/p>\n An example of that might be Brisbane at the moment. It has a Location Score of 56, so that\u2019s about balanced. And of course, Sydney is still just a little bit higher than that, so you\u2019d still expect it to have some sort of growth. But of course, it\u2019s come down a long way.<\/p>\n Kevin:<\/strong>\u00a0 What are some of the high achievers that you can nominate for us?<\/p>\n Jeremy:<\/strong>\u00a0 Actually, one interesting one is Melbourne. Despite the fact that we\u2019re hearing that there\u2019s been little growth, I\u2019m just wondering whether that\u2019s seasonal \u2013 perhaps, Christmas, New Year\u2019s, and Easter, and so on \u2013 because we\u2019re seeing that the Location Score is still reasonably high. It has come back a bit from last year where it was quite high, around about 68. But it\u2019s still tracking about 65, and to me, that means there\u2019s still some growth left in the Melbourne market. I don\u2019t think that this year, it\u2019s going to be such a flat year for Melbourne.<\/p>\n But the standout markets, I think, are Geelong. Geelong had a very high Location Score. Let me just flick through the report and find out where that was. I think it had the second highest Location Score. This is data finishing March 2018. It had a location score of 66, which is quite healthy \u2013 very healthy \u2013 and that\u2019s a natural response of the Melbourne growth, that it\u2019s starting to ripple out towards the nearest regional markets. Of course, Geelong being within a stone\u2019s throw of Melbourne.<\/p>\n Kevin:<\/strong>\u00a0 We\u2019ve heard some horror stories about Perth. What are you noticing there? What\u2019s it telling you?<\/p>\n Jeremy:<\/strong>\u00a0 It\u2019s still no good news for Perth, but it appears that it has bottomed. The Location Score for Perth has been pretty much constant over the last two years. It\u2019s been tracking around 50, 52, 51. There\u2019s a little bit of volatility there, but the good news is that it isn\u2019t going any further south.<\/p>\n It\u2019s decline probably finished towards the middle of 2016, so since then, it\u2019s just been smooth sailing. But that doesn\u2019t mean it\u2019s about to enter its growth phase. It could just sit on the bottom there for who knows how long?<\/p>\n Kevin:<\/strong>\u00a0 I was going to ask you at what point do you say maybe the Perth market has turned around. Is that over 55?<\/p>\n Jeremy:<\/strong>\u00a0 I personally would like to see it go above 60 before I\u2019d show any interest in it, in fact, 62. To me, 55 is still just balanced; it\u2019s business as usual. Most markets are in a state of balance. There\u2019s this tug of war between supply and demand. Every market wants to be in balance, and so the vast majority of them are around that 50 to 55, mid-50s. So, it doesn\u2019t get our interest unless it\u2019s getting up above 62. That\u2019s when it triggers some attention from us.<\/p>\n Kevin:<\/strong>\u00a0 I guess we have to be pretty careful here too, don\u2019t we? We\u2019re talking in general terms here about capital cities, but even within capital cities there are markets within markets.<\/p>\n Jeremy:<\/strong>\u00a0 Yes. Actually, an interesting point there. I\u2019ve noticed there are a couple of markets in Perth that have caught my eye. And this is usually the case. When you see a boom starting off, it\u2019s usually affluent areas where the property prices are quite expensive. People are looking at them and thinking \u201cThat\u2019s really good value for money. I know we\u2019re in the middle of a flat period.\u201d And that\u2019s what triggers the start of the boom, and then it ripples outwards. Then you have this flight to affordable locations towards the end of the boom.<\/p>\n We\u2019ve noticed just a couple of those exclusive sort of areas in Perth, their individual Location Scores have just started to climb up into the interesting range. It\u2019s no signal yet, but like you said, there are markets within markets, and so people in Perth probably have a few opportunities coming their way soon.<\/p>\n Kevin:<\/strong>\u00a0 Go to Real Estate Talk. Look for that button. That\u2019ll take you to LocationScore.com.au. It will tell you a lot more detail. You can dig into that. You can subscribe to it, and then you can go and have a look at any suburb you like and get all kinds of information we\u2019ve been talking to Jeremy about today.<\/p>\n You can get a bit more information, too, by going to RET, Real Estate Talk, and putting in \u201cAussie swingers reveal future rises,\u201d and that\u2019ll take you straight to the article that actually gives you a lot more detail, a lot more suburbs, and actually looks at the markets of Sydney, Melbourne, Brisbane, Perth, Adelaide, Gold Coast, Newcastle, Canberra, Sunshine Coast, Central Coast, Geelong, Wollongong, and Hobart, to give you a really good insight.<\/p>\n Jeremy Sheppard has been my guest, and we\u2019re talking about a website called LocationScore.com.au. Jeremy, thanks for your time.<\/p>\n Jeremy:<\/strong>\u00a0 Thanks very much, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":" We discover the 20 largest significant urban areas around Australia with Location Score.\u00a0 This App has the ability to look back and track where property markets have been to work out where they are going. \u00a0Jeremy Sheppard from Location Score explains how it works. 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