This is the first of a series of articles on “silly housing statistics”, highlighting how bizarre claims are made with inaccurate or mis-used statistics. We begin with the claim made at the end of January that Adelaide rents had surpassed those in Melbourne for the first time. The story came from housing market analysts PropTrack and was covered in the Advertiser (see below) and elsewhere.

Now I like a “killer stat” – a statistic which sums up an issue and grabs attention for a policy argument. I try to get such stats in most reports I write, but I also try to get the statistics right! So, is the claim about Adelaide and Melbourne rents right?

Turns out, the answer is complicated – and a bit of a primer on housing data.

A Silly Housing Statistic

The PropTrack data says that Adelaide’s median weekly rent in the December quarter of 2024 was $580, although this figure for the “asking” or advertised rent was considerably above the official government data on the median amounts actually agreed and paid – which was $550 per week. (The differences here are discussed further below).

Unfortunately, the official Victorian government data won’t come out until the middle of the year (which is why commercial data like PropTrack gets the headlines!). However, the PropTrack data suggests no change in the Melbourne median rent in the December Quarter – which if applied to the official data from the September Quarter would put the median rent at $560 p.w. – that is, above the Adelaide median.

We might also get a hint of the silliness of the “Adelaide more expensive than Melbourne” claim from another commercial data source. The SQM analysis for mid-quarter (12 November) showed Adelaide median rent at $609 per week, but Melbourne at $627 – both significantly higher than the PropTrack figures, but with Melbourne clearly higher than Adelaide.

But really, all these are silly statistics because the comparison is meaningless without also considering the mix of housing in the data. For instance, if rental houses are more expensive than units, then if one market has a greater proportion of houses than the other, its median rent price will be higher even if the comparable prices are lower. That is particularly relevant here because, at least in the September Quarter, only 40% of Melbourne rentals that quarter were houses by comparison with 55% of Adelaide rentals. That would make the overall median rental in Adelaide relatively higher, even if the rent for particular property types is lower.

Similarly, we would need to add location into the housing mix because if the majority of available rentals are in inner-city locations the median price would be higher than if the majority were in outer suburbs.

A further level of complexity here is provided by the government data for the September Quarter. It shows that Melbourne rental prices for units were significantly above Adelaide prices, but $25 a week lower for a 3-bedroom home. The housing mix clearly matters to the overall average – although it should be noted that the SQM data for September showed both Adelaide house and unit prices significantly below those in Melbourne.

A Silly Endeavour?

It is all a bit messy, and in that sense, the silliness of the Adelaide-Melbourne statistic is as much about making the simplistic comparison in the first place as it is about the conclusion of which jurisdiction is more expensive.

But even if you can sort through the comparison issues, there are also some pretty big questions about the usefulness of the base data.

The sad truth is that, despite a flood of housing data, there is actually no data that usefully gives average rents paid in each city, and no real basis from which we can say which city is more expensive – or more generally, what is happening “for renters”.

Navigating Rents, Rent Prices and Asking Rent Data

The first issue is that, all of the above data is in fact not comparing rents in Melbourne and Adelaide – it is comparing rent prices for new tenancies. But new tenancies are less than 10% of the total rental market (my calculation from SA bond data and 2021 census data). So it is simply a misrepresentation (and a silly housing statistic) to say, as in the Tiser headline, that these numbers refer to “rents”.

That said, there may be good reasons to focus on price of new tenancies. These prices represent the current market price faced by people looking to rent, and it is arguably a lead indicator which other rentals will follow. However, even with this focus, and even if what was being measured was accurately described (which it is usually not), there would still be problems.

There are two key data sources of data on rental prices for new tenancies: official state government data based on rental bonds paid, and the “asking rent” (i.e. advertised rent prices) data which is produced by a range of commercial firms (e.g. PropTrack, CoreLogic, SQM) that scrape real estate sites on the web to produce data and spruik their analytical tools.

As we saw above, there are data differences between the companies even on what the asking rent was, but the asking rents may also not be the price the property is rented at (which is what is captured in the official data). For instance, rent-bidding may mean actual prices go beyond the advertised price, but landlords may also wildly overestimate the rent they can get (the Tiser headline could also have read “Adelaide landlords more optimistic than Melbourne counterparts”!).

Further, web sites like realestate.com.au and the other commercial sources are dominated by advertisements from real estate agents, but real estate agents only manage about two-thirds of Adelaide’s private rental properties. The other third may not be advertised or captured by the web-scraping data, and rents tend to be below the real estate agent’s “market price” (see Census GCP4GADE – Table 40).

The difference between asking and actual rents is clear in the table below. It compares rental bond data for Adelaide metropolitan area for each quarter last year with the SQM asking price data for the week in the middle of each quarter. The SQM data (from their National Vacancy Rate reports) is used because it is well-respected and accessible, but as the table shows, the asking price data is 6% to 17% higher than the median rents actually paid by new tenants.

Silly Housing Statistics

So, in summary, the data behind the fairly counter-intuitive claim that Adelaide median rents have surpassed those in Melbourne refers to only a fraction of rents being paid across the market, and is inaccurate even in relation to new rentals because it only relates to advertised prices rather than the rent prices actually agreed and paid.

This makes the headline claim about Adelaide prices surpassing Melbourne a particularly silly statistic – and the media’s uncritical reporting of it even sillier.

However, our beloved Tiser is not alone here. A lot of media and even so-called expert commentary, either blindly or lazily, blurs the differences or makes leaps from asking price to rent prices to rents in general. The result is analysis which is inaccurate, over-generalised or at least questionable given the limitations of the data.

Beware the silly housing statistic.