- Almost 20pc of Melbourne’s investor-owned homes empty
Almost 20pc of Melbourne’s investor-owned homes empty
Not many lights on, not many taps running: water use data indicates that nearly one-fifth of all investor-owned homes may be vacant. Robert Prezioso
Published by the Australian Financial Review
by Michael Bleby
The number of empty houses and apartments in Melbourne is much higher than traditional estimates, with as many as one-fifth of all investor-owned properties lying empty, according to a study of water usage by think tank Prosper Australia.
Victoria leads the country in terms of new housing approvals and planning authorities gave the tick to 70,472 new dwellings in the 12 months to October – more than half of them apartments – but the Prosper figures indicate that while local and offshore investors are hungry for properties, they are not necessarily making those homes usable housing stock.
“There is an oversupply of housing that’s not being used,” said Catherine Cashmore, Prosper President and author of the report. “When the Victorian government talks about the need to build more housing to bring down prices, that strategy isn’t working. We don’t have anything to ensure those homes are being utilised. It doesn’t matter whether they’re foreign owned or investor owned the economic cost to us is enormous.”
A total 82,724 properties used less than 50 litres per day – the equivalent of a dripping tap and far less than a single person’s daily usage – suggesting they were effectively unoccupied, the data from retailers City West Water, South East Water and Yarra Valley Water shows.
Night light: apartments being deliberately kept vacant don’t add to the country’s stock of available housing, Prosper Australia says. Robert Prezioso
That’s equivalent to 4.8 per cent of greater Melbourne’s total housing stock and 18.9 per cent of all investor-owned housing stock.
As many as 24,872 properties consumed no water at all, making them clearly unoccupied.
The number of vacant properties leapt 28 per cent last year, according to Prosper’s Speculative Vacancies report, now in its eighth year. The think tank advocates for broad-based land taxes to raise the cost of holding land unproductively, as well as for an end to stamp duty, which it says impedes the market for land transactions.
“Capital gains are a much more powerful market motive than earning mere rents,” says Karl Fitzgerald, Prosper project director. “That’s why the tax game needs to change.”
The idea has support.
“Should there perhaps be some kind of differential land tax that changes people’s incentives?” said independent economist Saul Eslake. “I have some sympathy with that view.”
It’s not clear how much of the vacant housing stock is foreign-owned and how much is locally owned. However, the Melbourne CBD – which has drawn much investment from overseas buyers – had the largest number of vacancies, with just over 1100 – 6.7 per cent of its 16,632 homes – using no water at all. Almost 15 per cent – 2478 properties – consumed less than 50 litres per day.
The student-heavy areas of Carlton and Carlton South had the highest ratio of empty homes with 7.6 per cent, or 597, of their total 7837 homes using zero water.
Melbourne’s hidden vacancies will become visible if the property market slows.
“When we get a downturn in housing markets it does lead people to sell their properties or rent them out to the market, that’s when these vacancies will become visible,” Ms Cashmore said.