END VACANCY

Housing is a human right, not a privilege. The housing and land stock in our cities is a valuable asset.

However, a significant portion of this housing and land is being withheld from productive use. 

Many property investors focused on capital gains face no strong incentives to develop their vacant land or supply vacant housing to the rental market. 

Prosper Australia shone a light on vacancy and brought public attention to the extent of this issue. We’ve long been concerned that misleading vacancy statistics are leading us to misdiagnose a key cause of homelessness and rising rental prices, with so much media coverage of advertised rental vacancies failing to include land, housing, and apartments left undeveloped or empty. 

We began measuring true vacancy rates for built property in 2007 using a world-leading methodology now in use across multiple countries: utility data. Our 2019 Speculative Vacancies report identified 69,000 vacant or under-used properties in the Melbourne metropolitan region, equivalent to 4.1% of all properties. Updated figures in our 2023 Pandemic Rental Dynamics report showed this figure ballooning to 104,000 or 5.7% of the dwelling stock by 2022.

This ‘lost’ segment of the market artificially inflates the cost of renting and makes housing less affordable for households struggling with the cost of living. 

Speculative Vacancies (properties left intentionally empty) remove a large portion of our housing stock from the rental market

In 2017 the Victorian Government took a first step towards ending vacancy by introducing a vacancy tax to penalise property holders for leaving properties empty. We didn’t think the tax would go far enough to solve the problem, because the enforcement was weak. 

In 2023 the government responded to criticism of the effectiveness of the tax in the context of an escalating cost-of-living crisis, the government in late 2023 announced an expansion of this tax to cover all residential land in Victoria, including land with no existing housing on it.

While we welcome these changes, we know they don’t go far enough to address the underlying issues of housing affordability in Australia.

The problem goes deeper than vacant housing. Well-located land is also often held under-developed for speculative gain. Our 2022 Staged Releases report catalogued evidence for this by greenfield developers, who drip-feed housing lots to market to ensure prices remain high.  

The only enduring solution to unproductive withholding of land is a broad-based land tax. Taxing vacant property alone is helpful but difficult. Broad-based land taxation is simple and fair and can curb speculative investment. It will mean our land is treated as it should be: as an important asset of our community. 

Expanding Land Tax is an essential component of our Tax Shift reform proposals. Click here to read more about our Tax Shift campaign and download our free discussion document.

• Check out our latest speculative vacancy report
• See past speculative vacancy reports
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