Artificial intelligence takes the guesswork out of property market

Artificial intelligence is helping remove the ‘guess-estimate’ from major real estate decisions.

RiskWise Property Research is a FinTech that utilises artificial intelligence (AI) with a revolutionary automated algorithm which estimates the projected risks and returns for residential property, and also provides risk advise and research services. 

Founded in 2016, the company applies unparalleled technology in the form of a unique algorithm to enable lenders, corporations and industry professionals to assess the long-term risk or reward of a property before committing to purchase.

Clients also include private investors, home buyers, property professionals and other institutions.

The algorithm instantly generated a comprehensive report by measuring dozens of data and information variables (including more than 30 macro-economic) against a broad range of risk factors, ultimately scoring the property’s risk rating from low to high.

It’s like having a very powerful and intelligent tool to assess the risk and projected returns across the entire spectrum from the individual properties to developments, suburbs, regional areas and states with a very high level of accuracy. 

In addition to factors you would expect to see in such analysis, for example location, suburb, population and economic trends, it also takes into consideration very complex macro aspects such as credit restrictions, the Banking Royal Commission and the potential impact of changes to negative gearing and capital gains tax on each area in Australia.

More than a year ago, our algorithm enabled us to identify that Sydney was at a tipping point and oversupply in Brisbane would carry a high risk of significant oversupply and price reductions.

The new insights provided by this technology is revolutionising the way we assess risk on properties, the due diligence process and, ultimately, any lending and buying decisions.

Most property experts were looking in the rearview mirror meaning they looked at the history of the area to try to assess its future.

A panel of experts who, in August 2011, identified the 100 hotspots in Australia without assessing the risk properly.

These included a large number of areas in the mining states of Queensland and Western Australia where property prices have since collapsed.

Unlike other so-called experts, Riskwise uses a future view approach to the market which is what makes us the most innovative research house in Australia. We are the only company that drills down to the individual property level up to the state level to provide the best decision-making tools around uncertainty. 

Basically, one of the reasons for the current uncertainty in the property market at the moment is that, in general, the practice of the real estate industry from a risk-management perspective is to look to the past, and not the future, to determine risk.

The algorithm has proved so successful the company is planning a move into New Zealand, followed by the UK and then the US.

In a sense we’ve become myth busters, debunking the so-called ‘hotspot’ phenomenon in quite a few cases.

Who would have believed in 2011 and 2012 that investing in mining towns was not actually a good idea or that high crime areas can enjoy solid capital growth in the right conditions.

About Doron Peleg is the CEO/Founder of RiseWise Property Review. He has more than 20 years’ experience in risk management including, Co-Founder of Peleg, Kessel & Co, an assurance and advisory accounting firm & Executive Manager at Westpac Banking Corporation in Sydney. www.riskwiseproperty.com.au/