“With 46,220 properties vacant in Melbourne, the myth we have a housing shortage cannot go on much longer,” Earthsharing Australia spokesperson Karl Fitzgerald said today.
Earthsharing’s Speculative Vacancies report highlights that tightness in rental stock does not equate to a lack of housing. The much quoted REIV’s 1.7% vacancy rate (Nov 2010) only refers to dwellings for rent, a subgroup of Melbourne’s total housing stock.
“Victoria’s Minister for Planning Matthew Guy is relying on poor data in contemplating to sprawl Melbourne even further when 46,000 homes lie dormant.
“Capital gains for Melbourne properties averaged $120,000 in boom years like 2009. Why would all investors bother to rent out a property for $17,000 when they could hold some of their portfolio empty to enhance massive capital gains?” asked Fitzgerald.
“When iconic suburbs like Carlton South have Estimated Genuine Vacancy rates of 11.5 per cent, Melbourne East 18.5 per cent and Docklands a staggering 23.32 per cent, there is something wrong with the economic incentives society feeds off” Fitzgerald said.
The report analysed 64 per cent of Melbourne’s residential stock using water meter data supplied by City West Water and Yarra Valley Water. Dwellings using under 50 litres a day for 6 consecutive months were deemed vacant.
“Extrapolating this to all Melbourne real estate, there are over 61,000 empty homes and apartments lying empty.
“The Speculative Vacancy report is an urgent warning to potential buyers. This is not the time to make a life-long commitment to buy a home – the market is flooded with stock as investors bail out of the market. With supply overwhelming demand, prices must fall.
“First home buyers are being told it is a ‘buyer’s market’. “Transitioning from one of the world’s biggest property bubbles into a genuine buyers market is a process that takes years, not days.
“SQM Research’s figures on the volumes of Melbourne houses offered for sale shows a staggering increase. March volumes are up an enormous 48 per cent compared to last year; April is up by an even larger 68 per cent over 2010.
“Buyers are being deliberately misled by incomplete statistics further transformed by real estate ‘spin’. We urge the federal government to instruct the ABS to collect and publish a monthly statistical series on housing vacancy rates in the interest of a fully informed market”
“Experienced players in the land game know the bubble has peaked and have already sold out.” Fitzgerald concluded.
2 Comments on “46,220 empty homes – the genuine housing supply issue”
There is a huge oversupply of housing across Australia, and it is only now coming to the forefront of public attention.
12 months ago there was complete denial that real estate was in trouble, but now the realization is beginning to dawn on many that something terribly serious is about to occur in Australia. Australian housing is vastly, dramatically overpriced, by all reasonable measures. The recent analysis by The Economist is right on the money, and anyone will see from the excellent blogs on AustralianPropertyForum.com just how overvalued Australian housing really is: http://australianpropertyforum.com/pages/blogs
The bigger the boom, the bigger the bust, and the property boom that began in Australia in the nineties evolved into the greatest real estate bubble known to mankind. The bust that’s coming will be a doozy. As 2011 unfolds the spruikers will come to understand that real estate in Australia is dead for generations. During the next two years we can expect to see vacancy rates and inventory levels surge to unprecedented levels as house prices collapse by up to 40 or 50% in most parts of Australia. This might sound extreme, over the top. But how over the top were the 200% to 300% rises in house prices we saw over the past decades. A 50% fall is nothing in the scheme of things, it just brings prices back to a fair level.
The bubble is dead. Long live the new new paradigm, where an average family can finally afford a decent home in Australia. It’s been a long time coming, but soon it will be time for the bears to party. Bring it on!
Jason Jackson
Property Bubble Chart Gallery