The 2009 I Want to Live Here report reveals how speculative vacancies are overlooked in housing supply analyses.

“Inner city suburbs such as Richmond (7.40%), Princes Hill (8.76%) and Flemington (8.83%) had Genuine Vacancy Rates more than five times greater …

Vacancies in Melbourne Report

Andrew Sadauskas

EXECUTIVE SUMMARY

- Broad Scope: Our research evaluated 652,695 properties across 23 different municipalities in the western, inner, southern, and south eastern suburbs of Melbourne. This represents nearly half of Melbourne’s 1,471,155 private dwellings.

- Genuine Vacancy Rate: The Genuine Vacancy Rate includes all vacant properties, including those not on the rental property market (i.e. speculative vacancies) in both residential and non-residential markets.

- 1 in every 15 Melbourne properties vacant: We found Melbourne’s Genuine Vacancy Rate currently stands at 6.86%. Many of these vacant properties are being withheld from the rental market in the form of speculative vacancies. This hoarding pushes rental prices up.

- Housing Bubble: The focus should shift from a housing shortage in Melbourne and towards the cause of housing bubbles. The rental crisis relates to a shortage of landlords willing to lease their properties. Encouraging speculative vacancies to become occupied properties would result in more affordable housing and place a downward pressure on rents.

- Federal and State Public Policy Failure: Government policy is based on the assumption that housing is being used efficiently and that there is a shortage of housing despite access to information that indicates the high proportion of genuine vacancies. This false assumption informs costly policies including the First Home Owners Grant (at the Federal level) and the Urban Growth Boundary Expansion (at the State level).

- Instant Housing supply: 14,149 houses could be made available for housing within days if more effective economic policy was adopted.

- 44,753 vacant properties were found across Melbourne’s inner, western, and south eastern suburbs: In comparison, this is similar in number to the City of Maribyrnong (covering Footscray, Maidstone, Maribyrnong, and Yarraville) which has 30,484 households in total.

- One in five commercial properties are vacant in Melbourne’s south east: In Melbourne’s south east nearly one in five commercial properties are vacant; a Genuine Vacancy Rate of 17.22%. This means that the Genuine Vacancy Rate for commercial properties is above the 15% office vacancy rate found in Boston.

- Rust-belt suburbs: We found significant vacancies in Moorabbin (9.85% vacancy rate with 44.5% of properties zoned non-residential), Dandenong South (10.33% vacancy rate; 91.19% of properties zoned non residential) and Bayswater (4.52% vacancy rate with 25.1% of properties zoned non-residential).

- Alarming inner city vacancy rates: Many inner city suburbs have high Genuine Vacancy Rates, including Collingwood (which has a 7.44% Genuine Vacancy Rate), Southbank (6.89%), and Princes Hill (8.76%). The most astounding results, however, came from the 11.05% vacancy rate in Carlton, the 16.56% Genuine Vacancy Rate in West Melbourne, and the 28.96% Genuine Vacancy Rate in Carlton South.

- Capital Gains trump rental income: The highest Genuine Vacancies are found in areas where high capital gains are expected due to new infrastructure projects (Dandenong South re Eastlink) and/ or the inherent demand found in cultural hotspots (Carlton South).

- Clear need for Tax Reform: Local Governments must switch from Capital Improved Value (CIV) rating systems to a Site Value (SV) rating system. This would re-balance the playing field between the family home and the speculative investor. Federal and State Governments must switch from ‘transaction taxes’ on land (e.g. Stamp Duty and Capital Gains Tax on property) to a Land Tax to discourage speculation.

- Turnoff speculative demand: Such tax reform would channel landlords towards focusing on rental income rather than capital gains.This would signal a preference for more building, more density.

- Conservative Methodology: We did not examine the possibilities for subdividing existing properties in this report.

Media Release

Housing Shortage in Inner City a Myth

2,317 properties have been found empty in central Melbourne during Australia’s worst ever housing crisis.

Read the Full Report (PDF 432kb)
“The 2008 I Want to Live Here report has found a 7% genuine …

Bluestone Ward Key Findings:

Vacant land and housing in Bluestone Ward, City of Maribyrnong could see 1058 people living within 430 properties in the locality.
This would add 11.7% to the population in the municipality, greatly benefiting local business.
The extra supply of 430 properties to the market would limit if not reduce rampant property price inflation in the area.
Local, state and federal governments implicitly encourage such wastage with the tax system supporting speculative profiteering at the expense of productive land use.

A rising phenomenon sheds light on the housing affordability crisis. March 2007

It’s called vacant land. It can sit there all by itself whilst the world goes whizzing by it, with new houses being built and small business struggling to make ends meet. It looks innocent enough. Infact it is such a subtle part of the community that most don’t even see it. This meek little piece of the planet can outdo them all though, growing in value by triple the average wage increase.

What an amazing effort! Triple what the average wage grows and just one block making as much in lump sums as many small businesses do in a year. How does it do it? It sits back and waits for everyone else to work away, improving the schools and roads. Don’t worry, someone else’s taxes pay for it. It does nothing, but people flock to the area, wanting to live there, pushing its value higher and higher.