Jeremy..... Is the freebee offer still open.....
Cheers.... Martinv
Cheers.... Martinv
I have a feeling seeing as Jeremy had 1 post, he is not a regular user.
I too have been intrigued by the dsr score as a technical way of assisting with an area wide search.
Contacted the company last Friday.seems they are going through some product re definition.
DSR measures imbalance
Martinv,
Happy to send you a freebie of the latest DSR for April 2012. You can also contact me directly on [email protected].
BTW a high DSR means demand outweighs supply significantly. It takes a long time for out-of-balance markets to re-balance. This means you don't need to examine a chart looking for a trend, you just look at the DSR currently. It's a lead indicator, not like population growth data for which you must establish a trend.
Also, keep in mind that the DSR is just a means of choosing where to focus your research. It's not a replacement for research.
JS
Martinv,
Happy to send you a freebie of the latest DSR for April 2012. You can also contact me directly on [email protected].
BTW a high DSR means demand outweighs supply significantly. It takes a long time for out-of-balance markets to re-balance. This means you don't need to examine a chart looking for a trend, you just look at the DSR currently. It's a lead indicator, not like population growth data for which you must establish a trend.
Also, keep in mind that the DSR is just a means of choosing where to focus your research. It's not a replacement for research.
JS
I was excited to see the series you did in the YIP mag, Jeremy. I have been cultivating and refining my research process for years and it was exciting for me to see many of the inidcators/stats all compiled into one place with a score associated with it.
As you, and many have mentioned, it is not a replacement for fundamental research, but a great addition to it.
I think it's great and I have been watching from the side lines with keen interest.
Regards,
Lisa Parker
DSR now freely available
The Demand to Supply Ratio data is now freely available via a web-app and phone app called Boomtown. Visit www.DSRScore.com.au to follow links.
Thank you for everyone who provided feedback on the data of the original spread-sheet version.
I hope you can all get something out of Boomtown. Remember, it doesn't replace good old fashioned fundamental research - it just helps you target areas worthy of your research time and helps confirm/deny an area you may suspect is ready to boom.
The Demand to Supply Ratio data is now freely available via a web-app and phone app called Boomtown. Visit www.DSRScore.com.au to follow links.
Thank you for everyone who provided feedback on the data of the original spread-sheet version.
I hope you can all get something out of Boomtown. Remember, it doesn't replace good old fashioned fundamental research - it just helps you target areas worthy of your research time and helps confirm/deny an area you may suspect is ready to boom.
I use DSR to identify or confirm strong trends...
Property is a long term investment so fundamentals are more important than market swings however DSR is a great tool none-the-less.
There's a time lag to when the info is supplied but I've found there is a strong correlation to the DSR and movements in sale price.
Property is a long term investment so fundamentals are more important than market swings however DSR is a great tool none-the-less.
There's a time lag to when the info is supplied but I've found there is a strong correlation to the DSR and movements in sale price.
DSR Experience
Hi all,
Probably a bit late in the replies, but the original question asked if anyone had ever used the DSR Score to purchase a property and seen results.
Last Nov 2011 I was nearly ready to purchase an investment property in Sydney and saw Punchbowl, Wiley Park and Lakemba high in the DSR lists. At the time I saw many 2 bed flats advertised between $210-230k.
I watched these suburbs very closely and finally got a nicely reno'd one in Punchbowl in March 2012 for $245k. Compared to how the market was moving felt it was a good deal (as it was advertised for $269k), but was worried I had missed the boat.
Now in Nov 2012 you barely see anything (particularly in Punchbowl or Wiley Park) for under $270k that is fit for rental.
So it's not exactly mining-town growth but I'm definitely happy with the result so far in the short duration and feel like the area is unlikely to go down with the new shopping centres being built plus proximity to highways and rail.
I've repeated a moderate success in Sydney's outer west, but I think that growth is yet to fully happen.
One thing that has been mentioned is that you have to apply common sense. High scoring flats in the Sydney inner-city (eg. Chippendale, Pyrmont) are likely to be those serviced studios that are pumped out by the dozen. The high DSR score would likely be the result of low skewed median and the high yield, but honestly, who would buy them when you factor in resale values, high management fees and lack of control, all of which don't show in the scoring?
So the score is a good lead but requires a bit of analysis to work out what's behind the scenes.
Hi all,
Probably a bit late in the replies, but the original question asked if anyone had ever used the DSR Score to purchase a property and seen results.
Last Nov 2011 I was nearly ready to purchase an investment property in Sydney and saw Punchbowl, Wiley Park and Lakemba high in the DSR lists. At the time I saw many 2 bed flats advertised between $210-230k.
I watched these suburbs very closely and finally got a nicely reno'd one in Punchbowl in March 2012 for $245k. Compared to how the market was moving felt it was a good deal (as it was advertised for $269k), but was worried I had missed the boat.
Now in Nov 2012 you barely see anything (particularly in Punchbowl or Wiley Park) for under $270k that is fit for rental.
So it's not exactly mining-town growth but I'm definitely happy with the result so far in the short duration and feel like the area is unlikely to go down with the new shopping centres being built plus proximity to highways and rail.
I've repeated a moderate success in Sydney's outer west, but I think that growth is yet to fully happen.
One thing that has been mentioned is that you have to apply common sense. High scoring flats in the Sydney inner-city (eg. Chippendale, Pyrmont) are likely to be those serviced studios that are pumped out by the dozen. The high DSR score would likely be the result of low skewed median and the high yield, but honestly, who would buy them when you factor in resale values, high management fees and lack of control, all of which don't show in the scoring?
So the score is a good lead but requires a bit of analysis to work out what's behind the scenes.
Now not so convinced of DSR value
I am not currently convinced of the value of the DSR score. Why do I say this?
A few months ago I decided to take a random sampling of about 40 areas that were predicted to have high growth by the DSR score. I looked at the DSR score predicted across these areas from the 12 months prior in YIP. Then I examined the median price growth for those areas and found that they hadn't grown any faster than any other random sample of suburbs. In fact, many of them had gone backwards. This last random group I chose by closing my eyes, simply pointing to the suburb on the page and then checking its median growth.
Not super scientific, but enough to make me doubt the value of the DSR score. Which is a shame because I like the logic Jeremy Sheppard has applied to build it. And he seems to have made good growth using it himself.
The other thing that troubles me is that many areas that have grown massively, especially mining areas, seem to be often absent from the growth predictions. If the DSR score looks at supply/demand imbalance, then shouldn't these areas show up more often? If they don't show up, why? Is it that the DSR model can't capture the supply and demand metrics that drive these markets? Perhaps there are other metrics that need to be included to cover mining areas? I honestly don't know.
To settle the issue, I would like to see YIP or even better, API, commission an independent statistician to look purely at the numbers and examine the success rate compared to a random sampling of suburbs. If this is a truly objective analysis conducted with a published scientific method, then the value of the DSR as a leading indicator will be revealed.
In addition, I would like to see the study examine the likelihood of an individual picking only one or two suburbs from the DSR list and then making strong capital growth. Afterall, the average investor is likely to purchase only one or two properties per year rather than all 50 that exist in the high growth list.
Bonus points if the analysis can show how likely the same investor is to repeat this process over a period of 5 consecutive years using the DSR score. Afterall, the goal of the DSR strategy is to accelerate short-term gain to helps us leverage into larger sustained long-term gain. No point gaining with DSR for one year and then losing by following it for the remaining 4 years. If that makes sense?
Seems reasonable to me that a score that is all about predicting based on hard numbers should also be judged by hard numbers using a hard scientific methodology.
I am not currently convinced of the value of the DSR score. Why do I say this?
A few months ago I decided to take a random sampling of about 40 areas that were predicted to have high growth by the DSR score. I looked at the DSR score predicted across these areas from the 12 months prior in YIP. Then I examined the median price growth for those areas and found that they hadn't grown any faster than any other random sample of suburbs. In fact, many of them had gone backwards. This last random group I chose by closing my eyes, simply pointing to the suburb on the page and then checking its median growth.
Not super scientific, but enough to make me doubt the value of the DSR score. Which is a shame because I like the logic Jeremy Sheppard has applied to build it. And he seems to have made good growth using it himself.
The other thing that troubles me is that many areas that have grown massively, especially mining areas, seem to be often absent from the growth predictions. If the DSR score looks at supply/demand imbalance, then shouldn't these areas show up more often? If they don't show up, why? Is it that the DSR model can't capture the supply and demand metrics that drive these markets? Perhaps there are other metrics that need to be included to cover mining areas? I honestly don't know.
To settle the issue, I would like to see YIP or even better, API, commission an independent statistician to look purely at the numbers and examine the success rate compared to a random sampling of suburbs. If this is a truly objective analysis conducted with a published scientific method, then the value of the DSR as a leading indicator will be revealed.
In addition, I would like to see the study examine the likelihood of an individual picking only one or two suburbs from the DSR list and then making strong capital growth. Afterall, the average investor is likely to purchase only one or two properties per year rather than all 50 that exist in the high growth list.
Bonus points if the analysis can show how likely the same investor is to repeat this process over a period of 5 consecutive years using the DSR score. Afterall, the goal of the DSR strategy is to accelerate short-term gain to helps us leverage into larger sustained long-term gain. No point gaining with DSR for one year and then losing by following it for the remaining 4 years. If that makes sense?
Seems reasonable to me that a score that is all about predicting based on hard numbers should also be judged by hard numbers using a hard scientific methodology.
DSR does work better than random pickings
An analysis of the 3 year performance for DSR scores recorded in January 2010 is shown in the chart on page 9 of the PDF at...
http://hotspotcentral.com.au/reports/alderley/Project-Review-Alderley-St.pdf
The chart clearly shows a relationship between DSR scores and future median price growth. Data prior to January 2010 is not available.
The chart also shows there is volatility in the figures. A mkt with a DSR score of 40 doesn't necessarily outperform a mkt with a DSR score of 39.
Note that the DSR score is based on property type (houses/units). Units may be over-supplied while houses in the same suburb are under-supplied. If you're going to critique performance, you need to consider that.
Also, note that there is no genuinely accurate way of calculating capital growth at a market level. Medians suffer from statistical anomaly as does the repeat sales method used in the RP Data Rismark Hedonic index which is also only accurate at the LGA level.
The prior poster mentioned that the high DSR Scoring mkts of 2012 didn't perform so well. Firstly, according to my calculations that is not correct. They outperformed the national average over the same time frame. It may depend on where you get your figures from. I use a number of data provider medians and take the average.
I'd also like to point out that the national average growth rate over 2011 and 2012 was barely positive and depending on the data provider, was actually negative.
I scored the performance of the top 100 as published by API magazine for 2010 recommendations. The average growth for all mkts recommended was 7.33%. The DSR top 100 with statistical reliability of 75% or better for the same period was over 11.7%. That's "gurus" vs "stats with no fundamental research".
Mining towns often have low statistical reliability due to the bizarre nature of such markets. Information can be limited or misleading and this may result in the mkt being down-graded due to higher risk or omitted entirely from publication.
Mining towns also seem to get a lot of their growth from investor sentiment rather than from value for money. Although the DSR uses a mix of sentiment and value, it doesn't rate mining towns as highly as those mkts with both good sentiment and good value.
In general, mining towns do get good scores. Gladstone QLD has been scoring poorly in the 1st half of 2013 because of over-supply of developer stock. The DSR picked this up despite it being a "mining town" with billions of dollars worth of infrastructure.
Lastly, I'd like to point out that the DSR is not a capital growth prediction tool. It is a filtering tool and quick reference. Out of the top 50 DSR scoring mkts, I would start my time-consuming in-depth fundamental research with the top suburb on the list and then keep going down the list until I find a winner. The alternative is to do this in-depth research for all 15,000 localities around Australia. I have never bought purely based on the DSR score, I use it as a quick filtering tool only. Such a tool is available for free at boomapp.com.au.
An analysis of the 3 year performance for DSR scores recorded in January 2010 is shown in the chart on page 9 of the PDF at...
http://hotspotcentral.com.au/reports/alderley/Project-Review-Alderley-St.pdf
The chart clearly shows a relationship between DSR scores and future median price growth. Data prior to January 2010 is not available.
The chart also shows there is volatility in the figures. A mkt with a DSR score of 40 doesn't necessarily outperform a mkt with a DSR score of 39.
Note that the DSR score is based on property type (houses/units). Units may be over-supplied while houses in the same suburb are under-supplied. If you're going to critique performance, you need to consider that.
Also, note that there is no genuinely accurate way of calculating capital growth at a market level. Medians suffer from statistical anomaly as does the repeat sales method used in the RP Data Rismark Hedonic index which is also only accurate at the LGA level.
The prior poster mentioned that the high DSR Scoring mkts of 2012 didn't perform so well. Firstly, according to my calculations that is not correct. They outperformed the national average over the same time frame. It may depend on where you get your figures from. I use a number of data provider medians and take the average.
I'd also like to point out that the national average growth rate over 2011 and 2012 was barely positive and depending on the data provider, was actually negative.
I scored the performance of the top 100 as published by API magazine for 2010 recommendations. The average growth for all mkts recommended was 7.33%. The DSR top 100 with statistical reliability of 75% or better for the same period was over 11.7%. That's "gurus" vs "stats with no fundamental research".
Mining towns often have low statistical reliability due to the bizarre nature of such markets. Information can be limited or misleading and this may result in the mkt being down-graded due to higher risk or omitted entirely from publication.
Mining towns also seem to get a lot of their growth from investor sentiment rather than from value for money. Although the DSR uses a mix of sentiment and value, it doesn't rate mining towns as highly as those mkts with both good sentiment and good value.
In general, mining towns do get good scores. Gladstone QLD has been scoring poorly in the 1st half of 2013 because of over-supply of developer stock. The DSR picked this up despite it being a "mining town" with billions of dollars worth of infrastructure.
Lastly, I'd like to point out that the DSR is not a capital growth prediction tool. It is a filtering tool and quick reference. Out of the top 50 DSR scoring mkts, I would start my time-consuming in-depth fundamental research with the top suburb on the list and then keep going down the list until I find a winner. The alternative is to do this in-depth research for all 15,000 localities around Australia. I have never bought purely based on the DSR score, I use it as a quick filtering tool only. Such a tool is available for free at boomapp.com.au.
Yeah fair point, that chart isn't intuitive is it. My business partner asked pretty much the same question.
The chart means that for all markets that had a DSR of 30 in January 2010, on average they grew by about 8% from January 2010 to Jan 2013. Some of those mkts would've exceeded that and some would've performed worse. But they averaged 8% growth. And that's not per annum, that's 8% total over 3 yrs. That may not sound impressive, but...
The average DSR score as shown on the chart in Jan 2010 was around 23-24 and those mkts averaged growth of about 6% over the 3 years, that's about 2% per annum. Over the same time frame the Australian national average would've been slightly less than that, about 4% in total over those 3 years.
Note that out of 15,000 localities recognised by Australia Post, each theoretically has a unit and a house mkt. This makes 30,000 "markets" in total. But of course some of these theoretical mkts are non-existent and others are too thinly traded to have reliable info. So the DSR scores as seen in boomapp.com.au only represent about one third of the total possible - about 10,000.
This means the myriad of tiny little regional mkts with little economic activity are excluded from DSR published figures. These mkts have poor growth and coincidentally aren't included in the DSR scores shown in the chart. So the figures are biased a little higher than for the true Aussie national avg. Although it looks like over those 3 years there was about 6% growth on avg across Aus, the truth is it was less than that - around 4%.
That's not to say that all regional mkts have poor growth. In fact, truly spectacular growth can only come from regional mkts. But those mkts where nothing is going on, really suffer and because of that decreased activity, they have little data.
The fact that mkts with a DSR of 30 averaged 8% over 3 years doesn't mean the same will happen over the next 3 years. Similarly, you can't say that a mkt with a DSR score of 30 will double the national average growth rate over the next 3 years like they did over the last 3 years. All you can say is that high scoring DSR mkts have higher demand than supply and therefore are good starting points for more fundamental research.
The chart means that for all markets that had a DSR of 30 in January 2010, on average they grew by about 8% from January 2010 to Jan 2013. Some of those mkts would've exceeded that and some would've performed worse. But they averaged 8% growth. And that's not per annum, that's 8% total over 3 yrs. That may not sound impressive, but...
The average DSR score as shown on the chart in Jan 2010 was around 23-24 and those mkts averaged growth of about 6% over the 3 years, that's about 2% per annum. Over the same time frame the Australian national average would've been slightly less than that, about 4% in total over those 3 years.
Note that out of 15,000 localities recognised by Australia Post, each theoretically has a unit and a house mkt. This makes 30,000 "markets" in total. But of course some of these theoretical mkts are non-existent and others are too thinly traded to have reliable info. So the DSR scores as seen in boomapp.com.au only represent about one third of the total possible - about 10,000.
This means the myriad of tiny little regional mkts with little economic activity are excluded from DSR published figures. These mkts have poor growth and coincidentally aren't included in the DSR scores shown in the chart. So the figures are biased a little higher than for the true Aussie national avg. Although it looks like over those 3 years there was about 6% growth on avg across Aus, the truth is it was less than that - around 4%.
That's not to say that all regional mkts have poor growth. In fact, truly spectacular growth can only come from regional mkts. But those mkts where nothing is going on, really suffer and because of that decreased activity, they have little data.
The fact that mkts with a DSR of 30 averaged 8% over 3 years doesn't mean the same will happen over the next 3 years. Similarly, you can't say that a mkt with a DSR score of 30 will double the national average growth rate over the next 3 years like they did over the last 3 years. All you can say is that high scoring DSR mkts have higher demand than supply and therefore are good starting points for more fundamental research.
