rental shortage hyped up

This is interesting...

Rental shortage hyped up: researcher

Sunanda Creagh Urban Affairs Reporter
June 7, 2008
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SYDNEY'S rental crisis might not be nearly as bad as the real estate industry
would have you believe, new figures show.

The Real Estate Institute of NSW, which last year predicted a rental squeeze
so bad rents would rise by 20 per cent, says Sydney's current rental vacancy
rate is 0.9 per cent.

But data compiled exclusively for the Herald by property specialist SQM
Research shows the rental vacancy rate in some suburbs is as high as 10 per
cent.

The rental vacancy rate is the percentage of lettable properties that are
currently available to rent. A high vacancy rate means there is a glut of
rental properties, while a low rate will push rents up.

Louis Christopher from SQM Research said there was no independent body that
calculated the vacancy rate and most media reports of the rental market had
relied on figures supplied by the Real Estate Institute of NSW, which
represented estate agents.

"There are obvious potential conflicts of interest," said Mr Christopher, a
former chief of Australian Property Monitors and the head of property
research at the ratings house Adviser Edge.

"We know the Sydney rental market is tight but we believe the vacancy rates
reported by the REI are somewhat misleading and suspicious."

The REI calculates the vacancy rate by asking its members how many rental
properties on their books are vacant. But only 1800 - 60 per cent - of NSW's
agents are members of the REI, and few participate in the research.

The real vacancy rate could be calculated, Mr Christopher said, by "looking at
the number of rental listings for a suburb on, say, domain.com.au. Then you
look up the total number of rental properties in that suburb, as calculated
by the Australian Bureau of Statistics.

"You divide the number of current rental listings into the total number of
rental properties and you have the real vacancy rate."

Mr Christopher calculated the average Sydney vacancy rate to be about 2.9 per
cent, far higher than the REI's 0.9 per cent.

A healthy rental market would usually have a rental vacancy rate of around 5
or 6 per cent.

"It's agreed that it's a tight market in Sydney but it's not tight everywhere.
The REI's sample size is really bad; it's shocking," he said.

The Real Estate Institute NSW defended its methodology. While admitting that
sometimes as few as 20 per cent of its members returned data, it said the
figures were aggregated and the result was as accurate as political polling.

Its president, Steve Martin, said there was no doubt Sydney was suffering a
rental crisis.

Michael McNamara, the general manager of Australian Property Monitors, said
SQM Research's method of calculating vacancies was "silly" because some
listings were falsely advertised by agents to promote their brand.

Chris Martin, policy officer with the Tenants Union of NSW, said the rental
vacancy rate should be calculated by an independent body because the figure
influenced rents so much.

http://www.smh.com.au/news/national/rental...2259115316.html