Speculative Vacancies 9 – Impeding the market
- Water data indicates 60,901 residential properties were vacant in 2017 at a rate of 3.9%.
- Absolute vacancies using zero litres of water revealed 21,326 residential properties at 4.6% of the rental market.
- Up to 16.2% of investor owned rental properties were potentially vacant.
- Absolute vacancies had the potential to add 17.3% to housing for auction in 2017.
- The Australian Bureau of Statistics must take a more active role in measuring vacancy.
- The top 20 commercial vacancies (based on 0LpD) averaged 13.6%.
- Such vacancy placed undue pressure on small business, curbing their ability to compete, to provide wage increases.
- With a three year lag since our last report, we note that speculative vacancy numbers were down 35.1%. This is commensurate with profit taking at the peak of the property cycle.
- Vacancy is expected to increase over the coming years as speculators behave in a classic counter-cyclical fashion to snap up properties at the bottom of the market.
- Speculative vacancies increased by 49% during the 2010 -11 low point.
- Historical evidence points to the repeated occurrence of housing supply being turned off just at the point it could deliver affordability ie just as the market corrects.
- Land speculators impede the market to economise their efforts – earning more by doing less. Enforcing scarcity adds additional pricing pressure to the market. This inversion puts the public interest directly against the interest of land speculators.
- Speculative Vacancies are unethical and should not be encouraged. An urgent review of policy that contributes to increasing land and housing commodification is needed at both State and Federal levels.
- Vacancies detected fall into three cohorts:
- Gentrification patterns
- Cultural attractors
- Land banking ‘in the path of development’
- Land supply is a fundamentally flawed affordability strategy unless a counterweight to the market power of land banking is enacted.
- A number of international policy responses have been implemented due to the pressure property speculation places on the wider community.
- Many of these have focused on the taxation of foreign investment, which inadvertently protects local investors. Public education must continue to broaden such imposts.
- Victoria’s Vacant Residential Property Tax should be reformed to include:
- All vacant land within the UGB
- Charges on Site Value for non-strata titled sites
- An escalating, sliding tax scale over time: the longer vacant, the higher the charge
- Significant fines introduced for investors who fail to self-declare
- A reformed State Land Value Tax (LVT) must be broadened to replace Stamp Duties. This is a more holistic technique to discourage vacancy that actively counters the market power land bankers enjoy. Such a policy switch will signal that both lazy land use and property flipping are no longer valid market activities.
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