Supply Not Meeting Demand for Sydney’s Innermost Suburbs

Jeremy Sheppard writes an incisive piece for the website Your Investment Property wherein he talks about the way Sydney’s innermost suburbs are faring in terms of supply-demand dynamics. It is common knowledge that when supply beats demand, prices fall and if it is the other way, prices rise.

Demand to Supply Ratio (DSR)

There is something called the Demand to Supply Ratio (DSR) rating which suggests how a particular area is faring. The rating oscillates between 0 and 48 where 0 is for places with supply completely outperforming demand and 48 is for places with supply not meeting demand.

What drives DSR?

The Demand to Supply Ratio is arrived by factoring in many attributes of real estate. The list includes, but is not limited to, vacancy rates, vendor discounts, auction clearance rates, and rental yields.

Sydney much above the national average

Sheppard takes us through 20 innermost suburbs of Sydney and cites that the average DSR is 27, potently above the theoretical balance of 24. This means that any talk about a bust of the Sydney property market is a far cry. This is even more established if you look at the national average which is 23.

Sheppard beautifully constructs a trail wherein he affirms that Sydney in particular has a lot of sunny days ahead. Yes, two suburbs, namely Chippendale and Broadway are rallying marginally below the national average; there is no reason to panic just yet.

Vendor discounting

Redfern has a DSR of 36. What is noticeable is that areas with such high DSRs exhibit minimum vendor discounting. A sure indicator of a robust market where properties are selling without vendors being pressed to offer discounts.

You can read the original article here.

Sydney going strong

Sydney’s boom has coincided with some of the gloomiest predictions of experts and property gurus. Sydney has shown great resilience and beaten all those predictions hollow. It is looking towards becoming the hub of Asia Pacific. There are quite a few indicators for Sydney’s further growth, not the least being the pleasant invasion of the foreign investors.

A beautiful chain reaction

The vacancy rate may be a cause for worry though if it remains as abysmally low as I had pointed out in one of my articles. This said, the net overseas migration will ensure that skilled workforce adds impetus to the construction industry and on this can piggyback the government’s spending on Sydney infrastructure (more projects is equal to more construction).

The properties will get a further upward push once the infrastructure is bettered, thus completing a beautiful chain reaction.