Interactive: Rental prices and population

Ever wondered what is the number of people that rent in your suburb and how much rent they are paying? We have put together an interactive graph that shows the evolution of rents and population by suburb.

Click ⤢ at the bottom right corner of the report to enlarge!

Important note: This graph is compiled of data before the significant supply has hit some of Sydney, Melbourne and Brisbane unit markets. When looking at these suburbs (like Southbank, Zetland, Rosebery, Brisbane city keep this in mind).

What does this graph tell us? This graph shows number of people renting in each rental price bracket in 2011 and 2016. The data is compiled for New South Wales, Victoria and Queensland only. If you need your state or territory included, please let us know and we will look into additional data.

For example: if I select Southbank, VIC. I can see that in 2011, majority of people (942) were in $450-449 bracket, this evolved in 2016 to see majority of still in the same bracket. This tells me that rental yields and weekly rents didn’t shift/ change much over time. However, the graph also shows us that the renting population in the suburb has increased significantly. Almost every category of rent has significantly more people in 2016 than in 2011. Zetland in New South Wales, tells a different story, rents and population have increased significantly. With majority of tenants paying $650-749 in 2016, instead of $550-649 in 2011.

It is often said that property prices are an outcomes of property supply and demand. This is to a certain degree accurate; however, we want to explore the relationship between rental prices and property values. There are a number of reasons why we would like to explore this unorthodox relationship. Firstly, if we look at just supply demand and property prices, we usually mainly look at owner occupier market. There is a common saying that owner-occupiers drive the prices, while investors take the prices. If we look at property prices from strictly owner occupier lenses, we are looking at property that offers two benefits an investment (as owner occupiers do hope that the values of their hoses go up) and as a consumption good (since owner occupiers live in the property). So, in this instance we are looking from both supply and demand, a product that is consumed and yet is still a vehicle for investment.

We think looking at rental prices is a good indicator of current supply and demand of housing. If we look at rental and they increase with time, this tells us that the demand for rental stock outstrips supply. Take Sydney as an example, when stock was in shortage, population was growing strongly, Sydney property prices were increasing. However, when the recent supply of units has hit the market, we have noticed that rental market has softened and prices revered the growth. Similarly, in Darwin and most WA we have noticed that rental demand tapered off before the values of the properties started to decline.

It is an established view that a pre-emptive signal for house prices, and an indicator of available supply and demand is the rental index. Rental prices reflect the cost of people consuming property as a product, the consumption of housing. When the supply is less than the demand rents tend to rise, the bigger the difference between properties available for rent and tenants seeking consumption of housing stock the larger is the increase of rents. A good example is mining towns, where rents for a rather basic housing skyrocketed to over $1,000 per week.

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