Earthsharing report reveals staggering 6.9% vacancy rate in Melbourne

Karl FitzgeraldCommentary6 Comments

Casey Jenkins has re-interpreted the‘I Want to Live Here‘ report with some useful graphs.

As you may have read in the original report, we uncovered a genuine vacancy rate five times that reported by Real Estate Institute of Victoria; 6.9% compared to REIV’s 1.4%.

By collating data from Melbourne water suppliers we were able to assess the number of Melbourne properties that are genuinely vacant, as opposed to the number of properties on the rental market. The results were alarming.

The report indicates that just one in five vacant properties are being advertised as such, the rest are being withheld from the market in the form of speculative vacancies. This is very disturbing when you think that government policy is being based on figures that are so dramatically understated.

How can they possibly expect to effectively combat a shortage of affordable housing when they’re not even acknowledging the real amount of housing available?

Other key findings of the report, which identifies suburbs and municipalities hardest hit by speculative land hoarding, include a 29% vacancy rate in Carlton South and a 17.3% industrial and commercial vacancy rate in Melbourne’s South Eastern Suburbs.

The accompanying graphs are shocking for a city supposedly beset by land shortages. Download the report here.

There is a clear need for land tax reform – this would discourage land hoarding by encouraging landlords to focus on rental income rather than capital gains.

If housing is a human right then our tax policies must genuinely reflect this.

6 Comments on “Earthsharing report reveals staggering 6.9% vacancy rate in Melbourne”

  1. The empty housing a reult of (SIC) ‘still in court’because of divorce due to repayements on loan stress. Can we have a Truth in Water Advertising by Government
    Thanks Victoria- you have saved water
    simply by following our guide to speculate on housing by being absent, always at work, never having a life at home, or staying in hotel rooms

  2. Why is the 50L per day figure chosen? That’s about 9,000L over the six month period. A single person in an apartment could easily make that, especially if they spend a lot of time out of the house (eg. working long hours, showering at the gym, just being generally conservative with water). During water restrictions Brisbane’s target was 120L/person/day and we easily made that. Surely many people must have been substantially below that to reach the figure at an average level.

    Why not use 15L?

    A single dripping tap may use 50L per day – that’s 2L per hour – but it may not.

    Also, there is nothing wrong with people having a holiday home that is not used very often. It is not genuinely a part of the available housing stack. There is also the stock of homes for sale which are empty. It may have taken a few months to sell and another to settle, bringing water use under the 50L/day figure.

    I think a discussion of these issues, coupled with other survey data and statistics might improve the report.

    I do still agree that the vacancy rates cited are the lower end of reality.

  3. Good points Cameron but you can read the methodology section to the 2008 report. Most of your issues are outlined there.

    I like your post on dwelling approvals. Great research we will add to our database. We have been watching them here in Vic & feel that this disparity between approved to what is actually built is all part of the tick n flick speculative brigade. Land is more valuable with such zoning.

  4. With regards to your 50L per day cut off figure to indicate a property is vacant.
    I am a single person living in a one bedroom flat for 2 years, and previously a 2 bedroom unit for 17 years. I have averaged 35-40 litres per day for about a decade. I monitor my water each month.
    It is easy. A 6 minute shower uses 5 or 6 litres. How? Well I drip warm water over my head which flows all over my body. No waste at all. And I have a satisfyingly warm shower. Try it, it actually does a good job of showering. I also only have my hot water on for one hour each second day. In my previous unit I was only having the hot water on for one hour every three or four days. My electricity bill has always been below $100 each quarter until 2011 when everyones bills have increased by about 17%. I usually hand wash my clothes and use the washing machine for spin drying. I am a vegan so I use very little water in the kitchen. A quick wash in cold water is all I use for cleaning dishes. No fatty oils to clean off. etc. etc.
    I also never have to pay a water bill because my use is so low the water companies do not issue me a bill.

    I am in a block of 27 flats. In one flat the owner only occupies the flat for a few days a year for his visiting friends. In another flat the two owners only occupy it for a few weeks each year. So these two flats with their owner/occupiers never use more than 50L per day averaged for the year.
    So that makes 3 out of the 27 flats that do not use more than 50L per day averaged over 6 months or a year.
    Yet your methodology would include these 3 flats as being vacant

    I question your methodology.

    I will stick with the Office of Housing and REIV figures in my analyses

  5. Thanks Rory. You are the 2nd person to respond along these lines in 4 years. You are an inspiration with your water usage and we applaud you for your efforts.

    We openly accept that a few people do you use water as sparingly as yourself. We believe that this such usage is more than offset by leaking taps that can drip anywhere from 50 – 220L per day in vacant homes, let alone leaking pipes, a huge problem in the older suburbs.

    Regarding the other 2 flat owners – that is a symptom of poor land use. Is it fair that people who may work just around the corner from your place have to drive 45 minutes each way to work? Is urban sprawl to be maintained so that people can have the luxury of multiple property ownerships that they use only once or twice a year? We believe that such ownership, which is often motivated by speculative, money making dreams rather than the desire to maintain a roof over one’s head, should be rationalised. People could still choose to own multiple properties, but they would be at a tax disadvantage to those who only have one. Isn’t that a fairer way to divide up the spoils of the earth?

    If a yearly land rent was charged on such sites we could afford to ditch income tax, the regressive GST, the tax haven friendly company tax and so on. Land cannot be hidden in a tax haven.

    Only 10 taxes raise 90% of govt revenue. Why do we bother with the other 115 taxes? This deters small business and assists the big boys.

    If all such vacant properties (all properties in fact) were due to be charged a yearly land rent (or Land Value Tax as Dr Ken Henry of the Henry Tax Review called it), then such vacant properties would more than likely be put on the market . This would force prices down and keep a lid on property prices as the speculative intent would be lessened. We would also be encouraged to build up and not out.

    Let’s see if the huge number of properties flooding the market at present are the sign of an impending property crash, most likely due to the same motivations for over-building on the urban fringe as we saw in the USA.

  6. Pingback: The 4th Speculative Vacancies report | Prosper Australia

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