- Vacant Residential Land Tax is ineffective in curtailing property vacancies in Melbourne.
- Policy must prioritise housing as a human right, not a profit generating tool.
- Budget housing policy will drive up land prices, countering the need for fairer post-covid housing stability.
The Victorian government must take seriously the role of vacant housing in influencing housing supply, according to economic research group Prosper Australia.
Prosper Australia released its 10th Speculative Vacancies report today, which investigates the role of vacant land and housing in Melbourne. It uses abnormally low levels of water consumption as an indicator of vacancy.
“By putting the vacancy tax on holiday during the pandemic, Victoria’s State Treasurer Tim Pallas gave more than 69,000 vacant property owners official sanction to do even less with their property,” he says.
Prosper’s vacancy measure recorded over 69,000 vacant properties in 2019, however less than 1% have reported their properties vacant by opting into the government’s vacancy tax.
“Despite a 20 year housing crisis, almost as many properties were vacant as were sold in 2019. It’s no wonder Victorian land prices had the fourth highest increase on record, by $135.6 billion (19-20)” says Fitzgerald.
“Compounding the tax holiday, it appears the Vacant Residential Land Tax was built to fail, with no oversight and no fines issued for failure to self-report. Vacancies have increased by 13.3% since the tax was introduced.”
Prosper Australia has repeatedly called on State Governments to introduce progressive tax policies that address housing supply and affordability problems at their source rather than continue with short sighted band-aid policies that focus on the needs of developers and do nothing more than drive up land prices.
Mr Fitzgerald says the Prosper Speculative Vacancies report has been conducted for close to a decade now, revealing at a minimum about 20,000 properties that use zero litres of water – properties it defines as absolute vacancies.
“Instead of running an effective vacancy tax, which should have raised between $150 – 500 million, the government received just $6.1 million.”
“It appears that housing supply is a fair weather friend of affordability, only relevant when it comes to the John Woodman’s of this world wanting their land rezoned for millions in profit.
“The recent state budget is set to push property prices even higher. Stamp duty exemptions for properties under $1m will see any tax savings bid away into higher mortgages. This will likely undo the good of the 12,000 public housing dwellings announced as more buyers are pushed into mortgage stress.”
Fitzgerald says “if the government is serious about addressing the continual tension between housing stress and the increasing commodification of a place to call home, they need to do better at taxing wasted opportunities.”
“The Treasurer must tackle this commodification by moving with conviction to increase land taxes.”
“Just like the failure of trickle down economics, the failure of extensive rezonings has not made a mark on pricing pressures. The housing market will remain fundamentally broken if it continues to revolve around the market power of housing supply; constantly massaged to ensure ever increasing prices.
“Victorians need greater economic flexibility as we emerge from Covid and reducing land price pressures is the most effective and efficient way to do so. Higher holding charges, particularly via land taxes, are the fastest means for the government to support Victorian families and businesses responding to the challenges ahead.
“Housing became an immediate priority for Victorians when the pandemic struck, and the need for more affordable housing became increasingly apparent as lenders and landlords bent over backwards to keep families in their homes. To then introduce budget policy that supports the increased commodification of homes is disappointing.
“An inaccurate vacancy measure disguises the influence property hoarders have in pushing prices higher. The persistent puzzle of high vacancies alongside record land and housing prices must be addressed,“ says Fitzgerald.
Property tax reform that encourages greater land efficiency could open up housing for some 185,000 Victorians, offering immense support to families facing mortgage and rental crises.
- Water usage data finds 69,004 properties vacant, a ratio of 4.1%. in 2019
- Vacancies recorded in 2019 could house 185,000 people at current household averages.
- Vacancies increased 13.3% between 2017 and 2019.
- Properties using zero litres per day on average over 12 months totalled 24,042, a ratio of 1.4%.
- When added to the short term rental rate at an equivalised rate, some 4.7% of properties are likely vacant.
- Up to 16.1% of investor owned residential properties were potentially vacant.
- Just 12.3% more properties were sold as were likely vacant.
- The Valuer General’s quantification of residential property ‘assessments without buildings’ equates to approximately 63,314, a similar volume to our findings.
- Three times the amount of non-residential property stood vacant as was sold in last year’s vibrant industrial market.
- The state government’s Vacant Residential Land Tax was levied on only 2.6% of absolute vacancies. No fines have been recorded against non-declaring landholders. Water consumption has not been used as a vacancy indicator. Weak enforcement has cost the taxpayer at least $160 million a year.
- Vacancy rates in the gentrification belt of the inner north, alongside the cultural hotspot of mid eastern suburbs such as Box Hill and Glen Waverley, increased markedly in 2014 remaining >5% over five years.