Background: In the absence in the major Australian administrative health record collections of a direct measure of the socioeconomic status of the individual about whom the event is recorded, analysis of the association between the health status, use of health services and socioeconomic status of the population relies an area-based measure of socioeconomic status. This paper explores the reliability of the area of address (at the levels typically available in administrative data collections) as a proxy measure for socioeconomic disadvantage. The Western Australian Data Linkage System was used to show the extent to which hospital inpatient separation rates for residents of Perth vary by socioeconomic status of area of residence, when calculated at various levels of aggregation of area, from smallest (Census Collection District) to largest (postcode areas and Statistical Local Areas). Results are also provided of the reliability, over time, of the address as a measure of socioeconomic status. Results: There is a strong association between the socioeconomic status of the usual address of hospital inpatients at the smallest level in Perth, and weaker associations when the data are aggregated to larger areas. The analysis also shows that a higher proportion of people from the most disadvantaged areas are admitted to hospital than from the most well-off areas (13% more), and that these areas have more separations overall (47% more), as a result of larger numbers of multiple admissions. Of people admitted to hospital more than once in a five year period, four out of five had not moved address by the time of their second episode. Of those who moved, the most movement was within, or between, areas of similar socioeconomic status, with people from the most well off areas being the least likely to have moved. Conclusion: Postcode level and SLA level data provide a reliable, although understated, indication of socioeconomic disadvantage of area. The majority of Perth residents admitted to hospital in Western Australia had the same address when admitted again within five years. Of those who moved address, the majority had moved within, or between, areas of similar socioeconomic status. Access to data about individuals from the Western Australian Data Linkage System shows that more people from disadvantaged areas are admitted to a hospital, and that they have more episodes of hospitalisation. Were data to be available across Australia on a similar basis, it would be possible to undertake research of greater policy-relevance than is currently possible with the existing separations-based national database.