According to new research from the Australian Housing and Urban Research Institute (AHURI), Australia stands as an international outlier by depending on commercial entities to produce rental vacancy rates (RVRs) rather than government agencies, as is common in most countries.
The study found that different private companies produce notably different results, with vacancy rates for smaller capital cities varying by as much as 1.8% between providers.
This discrepancy can significantly alter perceptions of market conditions.
Swinburne University Senior Research Fellow and study lead Margaret Reynolds said the methodologies used by these companies often lack transparency.
“Different approaches result in different outcomes, and the methodologies used are often opaque,” Ms Reynolds said.
“When a 3% vacancy rate is generally the benchmark for a ‘healthy’ rental market, variations between outputs can paint very different pictures.”
The research challenges the widely accepted notion that a 3% vacancy rate represents a balanced rental market across all regions.
Analysis suggests this benchmark may only be applicable to Melbourne and Perth over the long term, with other cities potentially requiring different equilibrium points.
The study also revealed that rental markets in metropolitan areas tend to self-correct faster than those in regional locations, highlighting the need for more nuanced approaches to understanding rental market dynamics.
Ms Reynolds said that vacancy rates should not be viewed in isolation when assessing market health.
“An increasing RVR could be seen as markets self-correcting, but actually be the result of people dropping out of the market and becoming homeless, or overcrowding,” she said.
The research team discovered that most other countries rely on government-produced data that captures all unoccupied dwellings, providing a more comprehensive picture of housing availability.
In contrast, Australia’s metrics typically focus solely on vacant rental properties.
The commodification of property data in Australia means that valuable market insights remain inaccessible to many stakeholders, including advocacy groups and individual consumers who cannot afford to purchase this information.
The study did identify potential alternatives, noting that analysis of Victorian rental bond data showed promise as a publicly available source for calculating vacancy rates that aligned well with commercial providers’ figures.
However, inconsistent management of bond data across states currently limits the national applicability of this approach.
“It’s often changes in the RVR, or movements away from market equilibrium, where supply and demand are imbalanced, that are most important,” Ms Reynolds said.
