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% of renters vs home owners

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slay22 | 26 Nov 2012, 11:24 AM Agree 0
When deciding what suburb to investmet in, is it better to have a higher percentage of occupants that are renting or home owners?

The suburb I'm looking in has 20% renter occupancy, which is below some of the top performing suburbs. However there isn't a lot of properties availabel to rent, so I think it would be easy to rent out.

What are your thoughts?
  • Eos Property | 26 Nov 2012, 12:17 PM Agree 0
    Does depend a little on the type of property you are looking at and where it is. Someone once said to me buying in suburbs with a higher percentage of home owners is a capital growth driver. His logic was that home owners are the ones who repaint the fence, add garages and carports, keep the place looking nice, maintain their properties and so on. The end result being growth is fostered by these habits and features. This aspect of property investing is more relevant where home owners have a bit of a free rein with their yards and would not necessarily apply to strata titled property.

    That being said we have had property in suburbs with high levels of renters and have been able to maintain good rental returns and with relatively low vacancy rates over the life of the property.

    Not sure if this helps.
  • Madaline | 04 Dec 2012, 02:15 PM Agree 0
    I think it really depends on the area. If it's high rent because it is somewhere younger people want to live but can't afford a multimillion $ loan - like an inner city or other trendy area then high % of renters is a really good thing. However if the area has high rent % simply because no one can save enough for a deposit (even though the house prices are low entry point) and if there are/were a lot of mortgage defaults then that's probably not the area you want to invest in.
  • Peter Chun | 14 Feb 2013, 05:17 AM Agree 0
    Home owners, but this is dependent on your bigger picture strategy. What is it that specific property needs to do and by when? Is it inline with your portfolio? At Zenith Property Consulting, we’ve got more information on how to choose winning locations for property investments.
  • Peter Chun | 15 Feb 2013, 03:46 AM Agree 0
    Home owners, but this is dependant on your bigger picture strategy. What is it that specific property needs to do and by when? Is it inline with your portfolio?
  • Mike Fuller | | 19 Feb 2013, 02:26 PM Agree 0
    I think all the comments above are sound so I'll give my 2 cents worth purely from a stats perspective and as the creators of the DSR score data (published in YIP mag)

    When looking at these sorts of stats the question really is what does the stat mean and how relevant is it? This "owner-occupiers vs renters" might suggest that either the area is popular with tenants and hence why a higher percentage of tenants occupy properties in the area. This is relevant if you are holding for the long term in an area that may enjoy some spill over from neighboring suburbs that are reaching their more immediate price ceiling relative to income profiles of owners and tenants in the area.

    It could also suggest that the area is more popular with owner-occupiers with a higher correlation to capital growth as mentioned above.

    My suggestion is don't look at this statistic in isolation. We tend to look at 7 other statistics that together paint a very different picture about an than one stat alone would in isolation. You then need to look at the underlying trends behind all the statistics.

    Anyway, so why is it important to look at all the stats together for an area?

    Well firstly the 'owner-occupier to renter' ratio you mention is only updated every 5 years at census time. See the ABS website for more details about this stat. It's accurate now but how have the stats evolved over the last 15 years and how will the stat change between now and the next sample in 5 years time. What is the trend telling you? And how does it relate to the key stats like rental yields, vacancy rates, auction clearance rates, vendor discounting, online search interest, days on market ... etc?

    Take a look at or the data at the back of YIP mag and this will become a lot clearer. Basically you need to fly with all instruments working and not just the one (owner-occupiers vs renters).
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