Empty Investment Homes Hurt Affordability

How many thousand?

How many thousand?

Press Release for Speculative Vacancies 7 report launch

 A new report finds 64,386 properties are likely vacancies during Melbourne’s record-long housing supply crisis.

“32% of the Docklands may be a speculators paradise but it’s facing a ghost town future if the incentives for property investors continue” claimed Prosper Australia spokesperson Karl Fitzgerald.

“Vacancy rates have doubled in the Docklands, Abbotsford and West Melbourne over the last year. They tripled in Highett.”

“But property investors might as well be hiding in the Bahamas when it comes to these empty homes being quantified. The published vacancy rate in the media only includes properties available for rent. A wider catchment of total housing use is needed in this era dominated by property speculators. Water consumption is a useful proxy to housing usage.”

“With Melbourne’s capital gains over the last year quantifying $60,000, the $18,000 rental return is meagre in comparison. The incentives for investors to rent out a property are falling with each day this land bubble rockets skywards. “

“A holding penalty is needed to ensure our housing is used for living, rather than a vehicle for lavish, lightly taxed profits. At present such holding charges are laughed off at barely $1,800 p.a (Land Taxes and Municipal Rates).“

“The incredible mobility of capital, when combined with extensive tax incentives, encourages lazy landlords to work against affordability. They are in effect encouraged to ignore the competitive forces in the housing market.”

“Some properties in the Docklands have been on the market for two years and have only dropped their prices by $20,000 in three years. This is an indictment on housing affordability outcomes.”

“As the percentage of property investors continues to climb above 50%, the damaging side effects are being seen in thousands of vacant homes that enforce sprawl and the pain of gridlock.”

“The state built a $110 million train station in Williams Landing. Consistent land re-zonings have been handed to developers to meet affordability demands but the thanks home buyers get is a doubling of the speculative vacancy rate there from 3.1% – 8.3%. This compares to the dismissible 1.9% published as the ‘to let’ vacancy.”

“The state’s leading export industry, tertiary education, was warmly welcomed with a 14.7% vacancy rate in Carlton South. No wonder rents are so high for international students.”

“These vacancies reflect a critical failure of the state government to use its tax base to its highest and best use. All sides of politics are standing idly by as the Abbott government ramps up to enforce the regressive GST. This will only compound housing affordability pressures. A fairer option would be to use the tax every major tax review in the last 20 years has recommended – a Land Tax.”

“A higher and flatter Land Tax will tax away these incredible capital gains whilst also facilitating improved public infrastructure financing and greater use of our already well serviced activity hubs.”

“The existence of so many vacancies, when combined with our recent Englobo report (which found developers have their desired 15 years of land supply) provide the bulwark of conditions necessary for affordable housing. But yet First Home Owners face record prices due to crowding out by investors. If a policy incentive is handed to FHOs, it reeks of policy fraud (ie FHO grants, SD discounts, Super access for deposits).”

“A more extensive vacancy rate must be quantified by government agencies. Once the speculative waste is quantified, the public can be mobilised to support a Land Tax on speculative activities, rather than the regressive GST” finished Fitzgerald.

The report will be launched tonight by report author Catherine Cashmore.

ENDS

Contact:
Karl Fitzgerald
03 9077 0999

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https://prosper.org.au/2014/11/12/empty-investment-homes-hurt-affordability/