Expert Bust #32 Ideal Tenant/Owner Mix

Each census we get asked whether we rent or own the property we’re in. Based on the answers published about a year later by the ABS, we can calculate the proportion of renters to owner-occupiers in a suburb.

I’ve heard some professionals in the industry suggest that investors want a high proportion of renters since it reflects demand. That is completely elbow-about-face.

Other experts suggest there’s some goldielocks range that is not too high and not too low.

What does the data say? Well here’s a chart based on calcs I made in 2018…

This chart shows the relationship between capital growth and proportion of renters. The figures used were from the 2016 census. The capital growth was for the 2 years from 2016 to 2018 (time of calculation).

The census before 2016 was 2011…

And before that we had 2006…

As you can see, the correlation doesn’t change even over a long period of time. And there’s no sweet-spot apparent either. The lower the proportion of renters, the better the capital growth.

It’s pretty straightforward analysis, but if you don’t have the data; or analysis skills; or you simply couldn’t be bothered, then spewing out a baseless opinion is an efficient alternative to being right.