How To Conduct Property Market Research
Property market research is an indispensable tool for making informed decisions in the real estate sector. It enables businesses to understand market dynamics, assess investment viability, and determine the potential of various properties.
By conducting comprehensive market research, you can gain insights into current trends, compare competitor offerings, and align your strategies with market demands. This guide will walk you through the essential steps to conduct effective property market research.
What is Property Market Research?
Property market research involves the systematic collection and analysis of data related to real estate markets. By analysing drivers of property supply and demand—such as government policies, demographic shifts, market sentiment, and key market indicators at both macro and local levels, we can obtain a comprehensive view of the real estate landscape. This data is then used by businesses or investors to understand market dynamics, forecast future trends, and ultimately, make informed and confident decisions.
Importance of Real Estate Market Research
Property market research is crucial for property developers, investors, real estate agencies, financial institutions, urban planners and more. It helps these parties make informed strategic decisions regarding property investments, development projects, market positioning, and urban development. The importance of property market research include:
- Informed Decision Making: Market research provides data for informed decisions, reducing the risks associated with property investments, development, or management.
- Identifying Opportunities: Detailed analysis helps spot lucrative investment opportunities and underserved market niches, guiding stakeholders towards profitable ventures.
- Understanding Market Dynamics: It aids in comprehending how economic indicators, government policies, and social trends affect the real estate market, allowing for strategic planning and forecasting.
- Competitive Advantage: Having in-depth market knowledge provides a competitive edge, enabling businesses to anticipate market changes and adapt strategies more effectively than their competitors.
- Risk Mitigation: By gaining insights into the market's current conditions and future trends, stakeholders can better assess and mitigate potential risks associated with their real estate investments.
Objectives of Real Estate Market Research
The primary objective of property market research is to gather and analyse data that informs strategic decisions. Typically, parties interested in real estate data are looking for the following:
- Market Segmentation and Targeting: Divide the market based on demographics and other criteria to identify segments with the highest potential for investments or development.
- Price Optimisation: Find the optimal pricing strategy for buying, selling, or renting properties, considering the prevailing market conditions to maximise returns or marketability.
- Trend Analysis: Evaluate past and current market trends to predict future movements, helping stakeholders to strategically time their investments or development projects.
- Competition Analysis: Analyse the competitive landscape by identifying main competitors, understanding their strategies, strengths, and weaknesses.
- Supply and Demand Analysis: Gauge the balance between market supply and demand, pinpointing gaps and forecasting shifts to guide development decisions.
- Investment Risk Assessment: Appraise the potential risks involved in real estate investments by analysing market stability and trends, thereby developing strategies to mitigate these risks and optimise investment returns.
Our Preferred Tools for Property Market Research: DataSense and ProxyPrice
To conduct thorough and reliable property market research, we utilise two powerful tools: DataSense and ProxyPrice. They provide comprehensive data and insights, enabling informed and strategic decision-making.
DataSense
- A property insights tool and analytics platform focused on trusted data and timely market analysis.
- Helps partners in the property ecosystem make informed and confident decisions.
- Converts raw data and aggregates it into insights that drive business goals.
ProxyPrice
- An Automated Valuation Model (AVM) → A valuation tool offering quick indicative valuation estimations and comparative market analysis.
- Factors considered include historical transactions, location, property type, specifications, timeframe, data quality, and growth/decline rates.
Conducting Real Estate Market Research with DataSense and ProxyPrice
DataSense and ProxyPrice are powerful tools designed to simplify data collection and analysis to provide actionable insights. This section will explore how to use DataSense to define research objectives, gather market data, assess demand and supply dynamics, and evaluate market trends.
Step 1: Define Your Problem Statement and Research Questions
The foundation of effective market research is establishing clear objectives. Begin by articulating your problem statement: What are you trying to solve or understand? Then, formulate specific research questions to guide your analysis.
For instance, if a firm is considering investing in either residential or commercial properties, their problem statement might be, "Which property type in Malaysia (residential or commercial) offers the highest potential returns for our investment portfolio?"
To answer this, the firm might come up with specific research questions that revolve around:
- Rental yields and occupancy rates for residential vs. commercial properties in specific locations.
- Historical price trends and future forecasts for each property type.
- Key demographic and economic indicators influencing demand in each segment.
DataSense can help refine these questions by providing insights into various market segments and trends, highlighting areas with high demand for specific property types or revealing emerging trends in buyer preferences.
Step 2: Refining and Validating Your Hypothesis to Set Business Objectives
Once you have defined your research questions, develop a hypothesis about the market. For example, the firm might hypothesise that "Residential properties in Kuala Lumpur offer higher rental yields and greater potential for capital appreciation than commercial properties."
DataSense and ProxyPrice can then be used to retrieve data on user behaviour, market demand indicators, and historical trends for both residential and commercial segments.
By analysing this information, the firm can validate or disprove their hypothesis. If the data supports the hypothesis, they can confidently proceed with their research and investment plans. If not, they can revise their hypothesis and explore alternative strategies, such as focusing on a different property type or location.
How DataSense Can Identify Market Segments for Your Hypothesis
Using DataSense, firms can filter data based on demographics, economic indicators, and property types to pinpoint specific market segments.
- Demographic Filters: Using the transaction insights module in DataSense, firms can analyse buyer profiles such as investors, first-time homebuyers, or upgraders/downgraders. They can also examine age groups and the properties/locations these buyers are interested in.
- Economic Filters: DataSense’s transaction insights module allows firms to compare the median price and price per square foot (psf) transaction amounts between different areas. They can also view a breakdown of market share by property type, providing a clear picture of the economic viability of residential and commercial investments.
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- Property Type Filters: Utilising DataSense’s demand analytics module, firms can compare factors like supply and demand changes, rental yield, demand diversity, and demand for different property types and sizes.
Formulating Testable Hypotheses and Measurable Indicators
After identifying potential market segments, the next step is to formulate testable hypotheses about those segments and define measurable indicators to track their performance. This provides a structured framework to evaluate the potential of each segment and validate your initial assumptions.
Clear, specific hypotheses allow you to focus your research and analysis efforts. Measurable indicators, on the other hand, enable you to track progress and evaluate the success of your strategies over time. These indicators should be directly relevant to your research questions and aligned with your overall business objectives.
Select the Right Metrics
Identifying and tracking key metrics is the foundation of successful property market research. A firm deciding between investing in residential or commercial properties might use DataSense to identify these metrics:
- Growth Areas: DataSense can highlight areas with strong growth indicators such as an increase in population or economic activity, helping firms target the most promising regions.
- High-Demand Segments: DataSense can show demand trends and supply shortages, guiding firms towards high-demand, low-supply markets.
- Under-Served Niches: DataSense provides data on market pressures and demand gaps, enabling firms to find under-served niches with high investment potential.
Once you’ve chosen the metrics to focus on, you can start gathering the relevant market data for your research goal.
Step 2: Testing and Validating the Hypothesis Using Different Data Sets and Different Parameters
DataSense provides access to a wealth of market data, including demographics, property listings, and transaction histories.
Example: Let's illustrate how users can use DataSense to gather and analyse neighbourhood data and average property prices for residential condominiums in Johor Malaysia, and utilise the data to validate their hypotheses.
Under Transaction Insights, users can select their parameters by choosing the state, address, project/township/area, property category, building type, and date range. From here, they can:
Review Demographic Data to Validate Hypotheses Regarding Market Segments
Selecting the Demographic tab, users can view information such as buyer ethnicity for districts within Johor presented in easy-to-read charts. In this example, we can see that 46% of residential condominium buyers in Johor are Chinese, followed by Malay at 35%, as well as a breakdown of the locations and building types purchased.
Review Past Transactions to Validate Market Hypothesis
Selecting the sales tab, users can view past transaction information, including date, address, size of the property, as well as total transaction price and psf.
Reviewing Rental and Other Metrics to Validate Marketing and Investment Hypotheses
Selecting the Rental tab from the Transaction Insights module, users can view rental transaction metrics such as agreement dates, start and end dates, as well as monthly fees. This data can be sorted by price, psf, area (sqft), building type, rental start/end dates as well as address.
Examples of other useful metrics users can search for include:
- Rental yields for rental properties in the area
- Vacancy rates of rental properties in the area
- Average prices of property sold in the area
- Popularity of different property types in the area
And many more.
Step 3: Using Real Time Data to Validate Hypothesis on Market Shifts
DataSense also offers robust tools for analysing real estate supply and demand, monitoring inventory levels, as well as tracking absorption rates to better understand market balance. This section will explain how to utilise Datasense’s demand and supply features to gain a comprehensive understanding of the market.
Example: Let's consider a scenario where a firm wants to review its hypothesis on market gaps and shifts in demand in order to optimise their marketing and investment efforts.
Using the demand analytics module, users can select their parameters by specifying properties for sale/rent, the type of property, region, project name, size or price. From here, they can:
Review the Project’s Demand Analysis
Under the Project Overview tab in the demand analytics module, users can see the demand ranking for their project compared to the broader region or country, as well as the PropertyGuru Market Index (PGMI). PGMI is based on the demand-to-supply ratio of weighted visitors divided by unique listings. This is determined by data such as web traffic on property listings and inquiry rates.
Assess Supply Metrics
Further down in the Project Overview Tab, users can review supply and demand changes compared to the previous month and year. This ability to monitor supply and demand dynamics helps investors make informed decisions by identifying trends that can affect pricing strategies and market timing.
Under the Unit Research module, users can see the sale price of units for a particular project at a glance. Here, we can see that the sale price for condominium units at Park Colonial sits at million. Clicking into “View Popularity Distribution” will pull up a table with listings and their specific prices. This is useful for assessing supply as it provides a clear overview of available units and their price points, enabling users to gauge the market and identify potential gaps in supply.
Step 4: Validating Hypothesis on Market Trends and Timing of Purchase or Sale
Evaluating market trends is essential to understanding the dynamics of the property market. DataSense’s trend analysis features enable users to research year-over-year changes in property prices and rental rates, identify patterns in rent fluctuations, and spotlight future growth areas.
Example: Let's consider a scenario where a property developer wants to conduct research for apartments in Kuala Lumpur to determine the timing of a purchase or sale of a project.
Identify Trends for Selling Price, Rental Price, and Demand
Under Transaction Insights, and the Analysis tab, users can look at trends for the number of transactions, median prices and median PSF for past residential apartment transactions in Kuala Lumpur. These can be sorted by month, quarter or year.
Under the Demand Analytics module, users can also compare the trend of demand and demand price changes against the previous month and year. In this example, we can see the demand for residential apartments in Kuala Lumpur remained relatively unchanged from 2022 to 2024.
Besides property sales, users can also view the rent demand and rental yield trends for the area.
Identify Demand and Supply Gaps in Specific Project Locations
With the Change in Demand Analysis feature, DataSense users can identify potential demand and supply gaps for specific property types across different regions based on the PropertyGuru Market Index (PGMI). This tool allows users to compare current demand and supply levels with historical trends, revealing whether demand is outpacing supply or vice versa. These insights can help validate hypotheses about market gaps and inform decisions regarding project launches, pricing adjustments, or investment strategies.
Similarly, the Change in Price Analysis feature offers insights into the median price per square foot (PSF) trends for specific property types and locations, helping users gauge the current market sentiment and assess the potential for price appreciation or depreciation. This information is crucial for sellers determining the optimal time to list their property, setting realistic price expectations, and understanding their bargaining position in negotiations.
Transform Your Property Market Research Process with DataSense
In an industry where trust in data is paramount, DataSense revolutionises property market research by leveraging proprietary data and transaction insights to test hypotheses at a granular level, ensuring reliable and actionable real estate intelligence for property agents, developers, investors and more.
With features like trend analysis, demand and supply metrics, and predictive analytics, DataSense offers a comprehensive suite of tools that simplify complex data into clear, understandable insights — empowering users to quickly identify market opportunities, track price fluctuations, and forecast future trends, ensuring they stay ahead in the competitive property market.
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