REP - Ripple Effect Potential®

What is the REP?

REP stands for Ripple Effect Potential. REP is an estimate of the amount of growth required by a property market to match that of its neighbours recently. The more growth the market's neighbours have experienced, the higher the REP will be.

A weighted average is used to combine neighbour recent growth. The closer a neighbouring market is, the more influence its recent growth will have on the calculation.

The ripple effect is an example of how a single market can't continue to experience above average growth forever. Sooner or later the lower prices of neighbouring suburbs start to look very attractive. When this happens the demand for the original epi-centre of growth subdues and is replaced with demand for neighbouring markets.

This rippling of growth usually starts in city centres during favourable economic conditions for real estate. It then ripples outwards towards fringe suburbs much like the ripples on a pond after a stone is dropped in the middle.

Why is the REP important?

The REP can add weight to the potential a property market has to experience strong growth. It is just another statistic that investors should consider.

Analysing a property market from every angle and seeing positive signs from all of them will give the investor more confidence about the nature of the market.

The REP is one of the statistics incorporated into the DSR+.

Is the REP reliable?

The REP uses property prices for a number of the nearest neighbours over a considerable period of time. Because the number of stats and the number of neighbours used is quite large, it is unlikely a single anomaly can affect the figure significantly. This makes the REP a reliable figure.