What D/S Ratio actually captures

Demand-Supply Ratio measures how many buyers are competing for each available property. Different data providers calculate it slightly differently, but the general formula is:

D/S Ratio = Buyer Interest Signals ÷ Stock on Market

Buyer interest is typically derived from realestate.com.au and Domain search activity (visits per listing, saved searches, enquiry rates). Stock on market is the active listings count.

A D/S of 1.0 means buyer interest and supply are balanced. Above 1.0 means more competition than stock — upward price pressure. Below 1.0 means abundant stock — buyers have leverage.

The bands that matter

  • Under 0.7 — buyer’s market. Stock is sitting. Sellers cutting prices. Prices typically flat or falling.
  • 0.7–1.0 — soft. Balanced-to-weak. Negotiation common.
  • 1.0–1.3 — healthy. Normal functioning market.
  • 1.3–1.8 — strong. Multiple buyers per listing. Upward price pressure within 3-6 months.
  • Above 1.8 — extreme. Bidding wars. Properties selling before inspection. Classic boom signals.

Perth’s northern growth corridor suburbs have been sitting at D/S ratios of 1.6–2.2 through late 2025 — explaining the tight DOM and vendor discount compression.

Why D/S leads price

D/S shows buyer activity before it translates into sales. The mechanism:

  1. Buyers begin searching a suburb (interest rises)
  2. They attend inspections (inquiries rise)
  3. Competition at sale drives prices up (prices finally move)

The lag between rising D/S and rising prices is typically 2-4 months. Watching D/S is watching the future of prices.

D/S versus “market temperature”

Many property commentators talk about “hot” and “cold” markets qualitatively. D/S is the quantitative version of the same intuition. If you’ve ever heard an agent say “there are 20 buyers waiting”, that’s anecdotal D/S.

What D/S won’t tell you:

  • Buyer quality — are they serious or tyre-kickers?
  • Price sensitivity — are they prepared to pay premiums?
  • Conversion — some suburbs generate enormous interest but low closes

Pair D/S with auction clearance rates and list-to-sale price ratios to distinguish genuine demand from noise.

How D/S changes across cycles

Historical pattern:

  • Upswing start — D/S rises from neutral to 1.3+. Investors who watch this signal buy here.
  • Peak boom — D/S 2.0+. Properties sell same-day. Everyone notices. Prices at top.
  • Cooling — D/S falls back through 1.0 as prices moderate and supply responds.
  • Trough — D/S below 0.7. Properties sitting. Vendor discounts widening.

For investors, the golden window is the early upswing — D/S rising through 1.3 before consensus catches up.

What drives Perth’s current D/S situation

Three factors keeping Perth D/S elevated through 2025-2026:

  • Limited new listings — sellers reluctant to sell when rents are rising faster than prices
  • Interstate buyer influx — 23% of recent Perth purchases are NSW/VIC-funded
  • Structural undersupply — construction hasn’t kept up with population growth

None of these unwind quickly. Interstate investors are effectively buying into a D/S ratio that’s likely to stay elevated through at least 2027.

Using D/S in your research

When evaluating a suburb:

  1. Check current D/S ratio (CoreLogic, SQM, Propertyology)
  2. Compare against 12-month and 36-month averages
  3. Look at direction — rising, flat, or falling
  4. Cross-check against DOM (should be tightening if D/S rising)
  5. Cross-check against Vendor Discounting (should be compressing)

If all five move together in the right direction — D/S rising, DOM tightening, vendor discounts narrowing — the suburb is almost certainly entering a growth phase.