Speculative Vacancies and Real Estate 4 Ransom

Karl FitzgeraldCommentary1 Comment

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As written up in The Age today, p5:

Speculators ‘locking up’ empty dwellings that could be homes

Michelle Griffin

PROPERTY speculators have locked up 46,220 empty homes in metropolitan Melbourne, the housing campaign group Earthsharing Australia says.

In a documentary soon to be released, Real Estate 4 Ransom, the group says that 4.95 per cent of the city’s potential housing stock is unoccupied, double the rental vacancy rate of 2.4 per cent published last week by the Real Estate Institute of Victoria.

While the institute calculated the volume of available rentals by taking a sample from 45,000 tenancies on the books of its member estate agencies, Earthsharing used water-meter data supplied by City West Water and Yarra Valley Water to determine which residentially zoned properties were empty.

Dwellings using less than 50 litres a day for six consecutive months were deemed vacant. At the height of the drought in 2008, average household daily water use in suburbs with stage three restrictions was about 140 to 160 litres a day.

The group’s Speculative Vacancy Report says that in Docklands, almost a quarter of residential properties there, 23.32 per cent, are vacant. The official vacancy rate for Docklands is 3.62 per cent.

Other established suburbs with many empty homes, according to the report, include East Melbourne (18.64 per cent), Carlton (11.51 per cent) and Essendon North (13.07 per cent).

A spokesman for the Tenants Union of Victoria, Toby Archer, said he regularly heard from tenants who reported that houses sat empty for more than a year after they were evicted by new landlords.

“The report highlights that there may be more houses potentially available to renters than the indicators developed by the REIV,” Mr Archer said.

Earthsharing director Karl Fitzgerald admits that properties with no water usage could include vacant blocks, derelict houses and even homes with water tanks.

But he says the estimates may be conservative, considering apartment blocks or townhouses could be built on many blocks.

“Local councils always overvalue the house and undervalue the land,” Mr Fitzgerald said. “It gives a huge economic incentive for the owner to smash the house down. You could spend $5000 to fix the holes in the wall and make it fit for tenants, but for many property investors, the main thing is to sell this property. The land is the valuable thing.”

To fund the $50,000 documentary about land banking and tax reform, Earthsharing drew on funds realised when it sold off two properties at the height of the boom in 2008, an office building in Hardware Lane in the city and a commercial property in Coburg.

“I used to be really embarrassed [by the properties]; we’ve got to put [them] to use,” Mr Fitzgerald said, adding that the documentary was ultimately an argument in favour of the Henry Review’s proposals for land tax.

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