The private rental housing market has generally not been well understood in Australia. Knowledge about Australian housing sub-markets and in particular about the low cost private rental sub-market is of special importance given current economic and social changes. This paper introduces a project that is intended to provide information on the supply side of this sub-market through an analysis of investors and of returns in the private rental housing market in South Australia. Investors in this market have been typified as unintentional and unsophisticated meaning that they display irrational economic behaviour and are therefore unresponsive to policy initiatives. The larger project, of which this paper is a part, seeks to investigate the validity of this position by examining the yields and returns from properties bought for investment between January 1997 and December 2000 within Metropolitan Adelaide, and by surveying investors who have bought within the same period. This paper focuses on the first stage of the project which aims to assess the incentives for investment in the private rental sector including the low cost sub-market, by an analysis of yields and returns. This analysis will enable an accurate comparison of returns to be made between low and high cost rental housing in South Australia.
The project that will act as a base line study for South Australia but with significant application throughout Australia.