The 2011 Census data continues to provide revealing insights into our changing housing market.
It is quite clear now that at some point over the past five years, there has been a shift towards renting rather than owner occupation. The Australian Bureau of Statics 2011 Census revealed 29.6% of residential dwelling occupiers were tenants. That was higher than the 27.2% in 2006 and also higher in 2001 where 26.3% was recorded.
This shift, combined with the natural increase in population has meant that demand for rental accommodation has accelerated over the past five years. Supply of rental dwellings has also increased at an accelerated rate; however, the evidence suggests demand has gradually been outstripping the increase in supply.
This in turn gives explanation as to why rents have been rising considerably above inflation over the same period and why SQM Research vacancy rates have been trending down over that period of time. The same census data reveals the following annual increase for each of the capital cities.
On the release of each Census, SQM Research normally revises its counts and projection of the number of established rental properties, and the 2011 Census release has proved to be no exception. However, we note the revision this time around has been marginal for most cities.
Revised Vacancy Rates
The results have revealed a slight downward revision in vacancy rates for certain capital cities – in particular Melbourne; however the overall national figure has remained relatively similar to that of our previous results.
Louis Christopher, managing director of SQM Research says “In my opinion, the shift towards rental living is a prime result of an overall unaffordable housing market, a reluctance to take on excessive mortgage debt and an awareness about falling house prices.
“The flip side to this is that rents have been rising much faster than inflation. Now the concern in this is that, excluding Melbourne, there does not seem to be any sign of relief in the rental market in the short to medium term.
“So I can only conclude that rents, particularly at the affordable end of the market, will continue to rise at these accelerated levels unless there is a strong move by tenants back into home ownership. Even so, there was such a brief shift in 2009 and yet back then, there was no major impact upon the rental market.”
SQM Research also notes a rather sharp rise in the number of vacancies for the month of June 2012; however this is potentially just a seasonal increase.
SQM’s calculations of vacancies are based on online rental listings that have been advertised for three weeks or more compared to the total number of established rental properties. The ABS counts of unoccupied dwellings are taken into account. SQM considers this a superior methodology compared to using a potentially incomplete sample of agency surveys or merely relying on raw online listings advertised.
Written by Louis Christopher of SQM Research