What is the rental vacancy rate?

SQM Research provide an excellent range of free real estate data which I frequently use and reference. Michael Matusik has had a spray at their rental vacancy rates data. This is how SQM determine what is a vacant rental from online sources:

The Rental Vacancies component is based on all monitored and unique online listings for the period of a calendar month. The series starts off in January 2005. All listings are taken from online monitoring of major listings sites. Only those properties with unique addresses or a unique listing id are used. Those advertisements with no addresses are excluded from the series. Any addresses repeated between sites are de-duped. Only those listings that have been advertised for three weeks or more (and are still currently advertised as at the time of collation) are used.

I don’t have a problem with that which is intended to identify what is genuinely vacant and not just part of the routine churn of tenants. What is more important is that a methodology is consistent over the historical series. Where I tend to agree with Matusik is what the SQM vacancy rates implies for the rental stock because I have previously taken this up with SQM also.

I never did get a satisfactory explanation and it still doesn’t reconcile when updated for 2016 Census data. This is SQM for postcode Cairns 4870:

SQM1Source: SQM Research

The 208 vacant dwellings and 1.4% vacancy rate implies a rental stock of 14,857 dwellings. This compares with 11,156 rentals in 4870 on census night. You would have to throw in all the census responses with no tenure stated as well as every unoccupied dwelling on census night to get to the implied stock. That pattern is replicated across other Cairns postcodes.

If I aggregate the SQM data for Cairns postcodes (4868, 4869, 4870, 4878, 4879) I get a vacancy rate of 1.6% in October. SQM also provide data on a regional basis although this is not labelled for number of vacancies and doesn’t correlate well with the aggregation for Cairns. Perhaps I have misunderstood something?

The SQM vacancy rate for the Cairns region at 1.9% does though correlate with the most recent HTW CairnsWatch which is based on a rent roll survey at 2%. It isn’t clear what the definition of a vacancy is though.

SQM2

Source: HTW CairnsWatch

More important than trying to achieve some kind definitional and measurement ideal is a consistent series over time which is understood.  While I have some doubts about this aspect of their data this doesn’t discredit SQM as a useful source. The query I would have on that HTW series is whether the ‘balanced market’ range displayed remains contemporary or requires review. It looks high compared to what now seems to be ‘normal’ in most cities.

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