Speculative Vacancies 11

Prosper Australia’s 11th Speculative Vacancy report examines the extent of unoccupied housing in Melbourne and what it reveals about land and housing markets.

The report counts empty and under-used dwellings for the years 2019 to 2023 based on average water usage over the calendar year.

It shows how vacancy rates surged during the pandemic and have remained elevated above  pre-pandemic levels, even amid the rental crisis of 2023.

Vacant properties highlight inequality and how housing supply is held hostage by speculative incentives driven by tax structures that reward unproductive asset holding and penalise productive activity.

Taxing vacant homes and land, as pioneered in Vancouver and recently expanded in Victoria, can push more properties into use. However, the report warns of risks with this approach. Broad-based land taxation is less intrusive and cumbersome than vacancy taxation and can more efficiently accelerate land development and nudge housing into use.

Report highlights:

• 27,408 dwellings remain completely empty: utilising water meter data, Prosper Australia’s latest count of empty homes reveals that 27,408 dwellings in metropolitan Melbourne (1.5% of all dwellings) were completely unoccupied in 2023.
• Underused housing has increased significantly: with the inclusion of dwellings that recorded less than one-quarter of the average single-person household consumption over the calendar year, almost 100,000 dwellings or 5.2% of all homes in metropolitan Melbourne were found to be either empty or barely used in 2023, up from fewer than 70,000 in 2019.
• Squandered potential: the volume of vacant housing in Melbourne now surpasses two and a half years’ worth of new dwelling construction, and could house everyone on the Victorian public housing waitlist twice over.
• Tax reform can unlock housing supply: the report highlights vacant housing and land banking as major, often overlooked barriers to housing supply, and argues for tax reform to undermine the incentive to speculate on rising housing and land values. 

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