Adam Schwab wrote up our fourth report on speculative vacancies in Crikey yesterday.

Shortage or glut? Feast or famine? The question of whether Australia is suffering a housing shortage continues to be hotly disputed, with the real estate and construction lobbies arguing a desperate shortage exists, while other independent bodies, such as Prosper Australia, disputing the notion of a shortage.

The housing glut argument is led by Earthsharing Australia, which last year produced a report suggesting that the vacancy rate in Melbourne (until recently, one of Australia’s hottest property markets) was about 5%. In fashionable suburbs, such as East Melbourne or the Docklands, vacancy rates exceeded 8%. Earthsharing’s report, which was based on water statistics provided by City West Water and Yarra Valley Water, suggested that more than 60,000 properties lay vacant in Melbourne — substantially more than the reported vacancy report suggested by the real estate lobby.

While not a perfect measure, there is a degree of commonsense to Earthsharing’s report. Rather than attempt to guess whether there is a housing shortage based on economic assumptions, the group simply checked whether to see water was being used in a property — it is not unreasonable to suggest that if no water is being used for a length of time, the property is unoccupied.

That view was contrasted by a report released by the National Housing Supply Council, which echoed the sentiments of construction groups and claimed Australia was in the midst of a housing shortage. In fact, according to the council, the shortage actually increased by 28,200 to 186,800 during 2011. Even worse, the alleged shortage is forecast to widen to 640,000 within 20 years.

The National Supply Council is a strange beast — formed by the federal government in 2008, the organisation is a strange mix of academia, property developers and the even respected Saul Eslake. Included in the council are Mark Hunter (CEO of Stockland Residential), Nigel Satterley (property developer and BRW Rich List member), Ruth Spielman (executive officer, National Growth Areas Alliance) and Simon Norris (Clarendon Homes Queensland).

The council’s rationale for deeming a housing shortage is worth considering further. That is because rather than look at actual demand for housing, the council uses “underlying” demand. This leads to strange results.

Last year, the population of Australia increased by 320,000 — this was through a combination of immigration and births (less deaths). This figure is sourced from the ABS, so we can assume it is about a correct a figure as we can locate. According to the council’s report, there were 131,000 dwellings added last year (this figure is lower than what other sources claim, but we’ll accept it).

The council’s own report noted that there are 8.7 million households in Australia — with a population of 22.4 million, that means there are 2.6 people per household. Using fairly simple arithmetic, that means with 2.6 people per dwelling, and 131,000 new dwellings, enough housing was built last year for 340,000 people.

But wait, the population only increased by 320,000 people — that means, despite the council’s claims, there is a surplus of housing being built (even with dwelling construction being less than forecast). This appears to contradict the council’s finding that the shortage increased in 2011.

The council claimed that “on the demand side, at any given point in time underlying demand may not feed through directly into effective (actual) demand” — basically, what that appears to mean is that while there isn’t really a shortage, it will make some assumptions that allow a shortage to appear.

Later, the council noted that “the level of underlying demand is driven mostly by migration and other demographic factors”. Essentially, it appears the council is claiming that demand may increase in coming years (even though immigration levels are falling, rather than increasing), and that is why a shortage exists. The fact that a surplus of housing was built last year is disregarded.

More mysteriously, the Supply Council also claimed that “there were about 8.7 million households in Australia in June 2010. The number of households is projected to be 12 million by 2030, representing a net increase of nearly 3.3 million households between 2010 and 2030″.

This alarming forecast again doesn’t appear matched by recent facts.

Based on household numbers, the council is predicting an Australian population of 31.2 million in 19 years. That’s an increase of 9 million from the current level. The problem? That would require Australia’s population to increase by 473,000 per year — 42% more than the population increased in 2011. In fact, that’s a higher population growth rate than Australia has ever recorded. The claim is more difficult to justify given that Australia’s population growth and migration is slowing after spiking in 2008 and 2009 (see table below).

House prices haven’t increased because of increased demand from migrants outstripping dwelling construction — rather, prices have risen because bank lending has created false demand. Supply factors have played little, if any role in the recent house price growth. As soon as bank lending is restricted (and this is happening already), it is likely the illusion of a supply shortage will disappear. Just like what happened in Japan in the 1990s, or California and Ireland after the recent financial crises.

Renegade Economists Podcast 176

As broadcast on the almighty 3CR, Wed 6th April, 2011.

Bryan Kavanagh from the LVRG and one of our most active blogs, The Depression, brings his 40 years of experience in the land game to the show. We discuss the Buyers Strike and why now is not the time to buy property.

Listen to the show
Subscribe to the podcast

Karl starts the show comparing the 1596 properties that have been for sale for over two months in Point Cook versus the 750 that sold for the entire year of 2010. Compare your suburb via SQM Research with this handy top suburbs for transactions list from RP Data. Something dramatic is happening in one of the world’s last remaining housing bubbles right now!

Listen to the REIV’s Larocca defend the have’s over the have not’s.

Home ownership getting tougher

Share the photo and the sounds. Don’t Buy Now – the market is crumbling!

A special thanks to all those people sharing stories on our Home Buyers Strike Facebook page. We’ll put your hard work to good use. Join the community as we build the numbers so that Gen X & Y cannot be ignored! Housing is a human right, not a speculative might.

The Rudd Government has reviewed the tax system.

The Henry Review came out strongly in favour of capturing economic rents for the common good. Read our analysis of the report here and here.

The Rudd Government has written off any serious reforms to issues relevant to housing affordability.

Why tax $285bn from people daring to work but only capture $40bn of the earth’s ever increasing value (scarcity rents)? Thus the wealth divide, small business desecration and rampant short-termism dominate our decisions.

Now is the time to send a clear message to the Rudd Labor Government that the balance needs to change.

We need to build pressure on the Rudd Government – please sign our petition!

Sign our petition

Read the petition preamble

Further reading

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 than the REIV’s vacancy rate of 1.4%” stated Earthsharing Australia spokesperson Karl Fitzgerald.

“By including speculative vacancies and under-utilised properties in our analysis, the genuine state of play in the property game is unveiled.”

“Speculative hot spots such as Carlton (11.05%), West Melbourne (16.56%) and Carlton South (28.96%) reflect how capital gains dominate the mindset of investors rather than rental returns.”

“When a speculator makes three times the capital gains over any rental income, writing off negative gearing is a petty consideration when hoarding saves on hassles and delivers bucket loads of cash.”

“With major infrastructure projects continually planned for these areas, speculators know they are onto a sure winner.”

“Student demand for apartments further solidifies the knowledge that these prime locations will always become more valuable.”

“Why sprawl the city when government policy should encourage us to build up, not out? Prime locations should be used for housing, not hoarding.”

“We call on governments at all levels to level the playing field between the productive and speculative sectors of the economy.”

“With the property industry benefiting from some of the world’s most generous tax breaks, our evidence shows they are squeezing the market. It is time for genuine tax reform.”

“Why tax houses? Abolish CIV and NAV rating so the family home is not subsidising the land banker.”

“Halve income taxes by flattening, widening and raising the Land Tax so there is less incentive for asset bubbles.”

“Lastly, give the RBA the power to implement Land Taxes so it removes this valuable policy lever from the lurches of lobbyists.” said Mr Fitzgerald.

The report sheds light on the poor utilisation of land by investigating the number of properties using little or no water.

2009 I Want to Live Here report (PDF 4.8MB)
Appendix 1 (PDF 4MB)
Appendix 2

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.

Read the Press Release

INTRODUCTION AND BACKGROUND

This is the Third Annual I Want to Live Here report on the Genuine Vacancy Rate in Melbourne, Australia. In previous years, the report has focused on the Genuine Vacancy Rate in the Bluestone Ward in the City of Maribyrnong (2007), and vacant properties in inner and western Melbourne (2008). The 2009 report is more ambitious in scope, examining Genuine Vacancy Rates in 23 different municipalities covering Melbourne’s south-eastern, inner northern, and western suburbs. In total, 652,695 properties were evaluated during our investigation.

The 2009 report is particularly timely for three key reasons. The first of these is the ongoing rental and housing affordability crises in Australia, which has increased the real estate burden on home buyers, renters, and businesses alike. The second is the Global Financial Crisis (GFC), which has seen the housing bubble collapse internationally. Indeed, many of the leading economists who predicted the global financial crisis (including Fred Harrison and Bryan Kavanagh) have identified speculative real estate price bubbles as a key cause of the current crisis. The third reason for the importance of these findings has been key State and Federal Government policy decisions which have been taken in response to the GFC.

The ‘Genuine Vacancy Rate’ includes all vacant properties, including those not on the rental property market (i.e. speculative vacancies). In the context of this report, it refers to both residential and non-residential markets, except where noted otherwise.

The Vacant Property Shortage Myth and the Global Financial Crisis

Central to much of the discussion about the rental and housing affordability crises has been premised on the ‘vacant property shortage myth’. According to this myth, the primary cause of the rental and housing affordability crises is a lack of vacant properties within existing urban areas, with new housing construction not keeping pace with a growing population.

In light of the Global Financial crisis, the question of whether high land prices are a product of speculation (i.e. properties being withheld from the market) or a shortage of vacant properties has very severe ramifications for the health of the Australian economy.

Research by Dirk Bezemer, a Professor of Economics at the University of Groningen in the Netherlands found that the Global Financial Crisis was successfully predicted by the models used by twelve leading economists. In examining the common features of their models, Bezemer noted that:

“A broadly shared element of analysis is the distinction between financial wealth and real assets… A concern with debt as the counterpart of financial wealth follows naturally… There is a recurrent emphasis (e.g. Baker 2007), that home equity-fuelled consumption has in recent years sustained stable growth… Their view was that as soon as debt growth slowed down – as it inevitably would within years – growth would falter and recession set in… The bursting of the international housing bubble was seen to have a severe impact on the world economy”

In other words, the twelve economists who predicted the Global Financial Crisis did so by noticing a bubble in land prices. They examined the debt levels associated with such bubbles, and predicted the economic impact of such land price bubbles bursting.

Internationally, particularly in the US, this is indeed what has happened. Consider California, where house prices have dropped 41% between March 2008 and March 2009 on the back of foreclosures, and have continued to fall since (a further 12% in August alone). Retail vacancy rates in some parts of the US are now so high that whole shopping centres have been abandoned, as cataloged on websites such as www.deadmalls.com. Office vacancy rates stand at 15% in Boston, 18% in Philadelphia and 21% in Austin, Texas.

And that’s even before we consider Detroit; a city which has seen 30,000 people move out in the past year alone. The population of the Detroit metro area is believed to currently stand at 827,000; less than half its peak population of nearly 2 million. (The reasons behind Detroit’s rise and subsequent fall are discussed in an article by economic historian Mason Gaffney entitled “What’s the Matter with Michigan?“).

In contrast to the housing bubble collapse seen overseas, land prices in Australia have apparently hit record highs. According to a recent REIV report – for example – the Melbourne median house price recently hit $520,000. Much of the analysis of the strength of the Australian property market compared to the falls experienced overseas have been premised on the vacant property shortage myth; that property prices in Australian capital cities won’t fall like cities overseas have because we have an under supply of housing and land.

However, if a significant supply of land and housing is being withheld from the market, land prices in Australia may be far more vulnerable to a price collapse than is commonly anticipated (should this vacant land be suddenly released on to the market).

State Policy Responses

The vacant property shortage myth has also been central to recent Government policies at both a State and Federal level.

At a State Policy level, pressure to alleviate the supposed vacant property shortage has led it to recently announce an expansion of the urban growth boundary, allowing 41,000 hectares of additional urban sprawl on Melbourne’s outer fringe. Linked to this policy are a series of new freeways, including the E6, Peninsula Link, Banyule Tunnel, and Outer Metropolitan Ring Road – all designed to service the transport needs of this new sprawl.

This new policy appears to be a significant deviation from the previous State Government planning policies outlined in Melbourne 2030, released in 2001. According to this earlier policy, “variation of the urban growth boundary will be infrequent,” (Melbourne 2030, p. 59) proposed that “Higher-density housing will be encouraged in and around Neighbourhood Activity Centres,” (ibid., p. 49.) and noted that “the average density of the metropolitan area at around 14.9 persons per hectare (pph) is low by international standards. Montreal has 33.8 pph, for example, and Toronto has 41.5 pph.” (ibid., p. 58). This higher density has also facilitated an increased modal share for public transport, with the report stating that “the proportion of motorised transport trips taken on public transport will more than double, from the present 9 per cent to 20 per cent.” (ibid., p. vii)

This proposed expansion of the urban growth boundary (with its associated freeways) has, quite understandably, generated significant grass roots opposition across Melbourne. In Melbourne’s south, the proposed Peninsula Link (which will cut through the 220 hectare Pines Flora and Fauna Reserve in Frankston North) is opposed by the Pines Protectors, who argue that bulldozing trees to build more freeways and sprawl is inappropriate given the seriousness of climate change. To the north, the Protect Our Heritage Group opposes the bulldozing of homes in the towns of Woodstock and Wollert in order to build the E6 freeway. And the Protectors of Public Lands oppose green wedges around Melbourne’s outer fringe falling into the hands of private developers.

This report will examine whether (in light of vacant properties within the existing Urban Growth Boundaries) the proposed sprawl and associated freeways are really as “necessary” or “inevitable” as currently claimed. It will also examine whether possible policy alternatives exist based on better utilisation of currently vacant properties within the existing Urban Growth Boundaries.

Federal Policy Responses

The vacant property shortage myth has also influenced politicians at the Federal level, most notably in the form of the First Home Owners’ Grant (FHOG).

The fundamental problem with the grant is that it increases demand for housing and land, and therefore places upwards pressure on the price of land. The net effect is to reward speculators who are withholding land from the market with higher prices, rather than encouraging them to sell and therefore putting downward pressure on the price of land.

Purpose of Study

Against the background outlined above, the purpose of this study is to expand the scope of previous I Want to Live Here reports by examining the number of genuine vacancies in the south-eastern suburbs, as well as the inner northern, and western suburbs of the Melbourne metropolitan area. The south-eastern suburbs are particularly interesting in that they cover a range of different categories of suburbs including industrial suburbs, upper class inner suburbs, middle class middle suburbs, and new outer suburban areas. Including the south-eastern suburbs also gives us a clearer picture of which suburbs have the most speculative vacancies.

METHODOLOGY

The key methodology for the 2008 I Want to Live Here Report was as follows:

“In order to determine the net volume of vacant houses in the inner suburbs we researched objective measures of occupancy that may be collected by an existing organisation. As an essential human need we chose water consumption as being the most indicative of a speculative vacancy at a given property…. 50L per day averaged over the first 6 months of 2008 was chosen as the maximum usage cutoff point. Leaking water systems can consume as much as 200L per day which means vacant housing can still consume water.

The 2009 I Want to Live Here report uses the same key methodology, with the survey period in the first six months of 2009.

For suburbs in Melbourne’s south-east (615,546 properties), we have improved upon this methodology in several ways:

1) We have divided residential dwellings into two categories: units (including flats, apartments, etc.), and houses (larger stand alone dwellings).

2) We have also included non residential properties (including offices, factories, warehouses, and shops) in our figures.

3) In addition to these, for each of our key statistics, we have also calculated a residential total (combining the figures for houses and flats) and an overall total (combining the figures for flats, houses, and non-residential properties).

4) For each suburb and municipality, we have calculated the number of vacant properties in terms of units, houses, non residential properties, the residential total, and an overall total.

5) For each suburb and municipality, we have calculated the number of occupied properties in terms of units, houses, non residential properties, the residential total, and an overall total.

6) For each suburb and municipality, we have calculated the total number of properties in terms of units, houses, non residential properties, the residential total, and an overall total.

7) For each suburb and municipality, we have calculated the Genuine Vacancy Rate in terms of units, houses, non residential properties, the residential total, and an overall total.

For each suburb and municipality, we have calculated the capacity for population growth within the existing housing stock assuming two residents per unit and three residents per house. We have also calculated a total capacity combining these two figures.

9) For each suburb and municipality, we have calculated the percentage of properties which are residential, and the percentage which are non-residential.

10) For each suburb and municipality, we have calculated the percentage of vacancies which are residential, and the percentage which are non-residential.

Notes on Methodology

The vacancy figures described in this report will be inherently conservative. The methodology does not count sites which could be created through sub-dividision – thus achieving a higher population density – if properties were used more efficiently. A vacant land holding is counted as just one vacancy, despite current trends for two – three dwellings to be placed on a typical suburban block.

Another example – were large sprawling open air car parks replaced with multi-level car parks or parking under buildings, those sites could in turn be subdivided. Therefore, the potential population of each of the suburbs and municipalities in this study is significantly higher than even the Genuine Vacancy Rate suggests.

Another point to keep in mind in regards to water consumption is that water meters are installed in the property as soon as the land owner applies for it. In general, these meters are read 3 months later; whether the building construction is completed or not is not recorded. During the construction period the builder will use water. This small amount of water use will be recorded on the meter.

Perhaps the most conservative of all is that dripping taps in vacant dwellings further water down the Genuine Vacancy Rate. Some taps drip up to 220L p/day. Our 50L per day cut off does not include such sites.

Exclusion of Land Banking

As The Age’s Ben Schneiders and Royce Millar uncovered in 2007, a major form of land speculation comes in the form of ‘land banking’ by developers. This is the practice of developers stockpiling vast supplies of undeveloped land and then drip-feeding it into the market slowly in order to maximise prices. In the 2006 / 07 financial year, for example, it was revealed that the six largest property developers acquired 38,000 more lots than they sold, and had managed to acquire $70 billion dollars worth of land, predominantly on Melbourne’s outer fringe.

The figures quoted in this report do not include the number of properties which could be built on ‘land bank’ holdings. This is because (as stated above) the methodology used in this report only counts existing subdivisions. If possible subdivisions were included, the Genuine Vacancy Rate would be significantly higher than the figures quoted in this report. For this reason, the figures quoted in this report will inherently be conservative.

KEY RESEARCH FINDINGS

The raw data of our research can be found in Appendices 1 and 2.

Genuine vacancies in the CBD have increased from 7% to 8.63% over the last year. We are repeatedly told that vacancies are at 1.4% or less in the CBD.

We found that the Genuine Vacancy Rate currently stands at 6.86%. This means that approximately one in every 15 Melbourne properties are currently vacant.

The vacancy rate is significantly higher than this in a number of suburbs and municipalities. These include the City of Melbourne (8.63%), the area around Tullamarine Airport in Hume (7.99%), and the City of Yarra (7.03%). The worst offender in this regard was Cardinia in Melbourne’s outer south-east, which currently has an extraordinary 20.87% vacancy rate.

The suburbs we examined in the City of Monash (the only municipality left employing Site Value Rating) had a vacancy rate of 3.65%; roughly half the Genuine Vacancy Rate of the 6.86% rate we found for Melbourne as a whole.

The State Government has recently pressured Monash into switching to the less efficient CIV rating system.

In total, we were able to identify 44,752 vacant properties. To put this number in to context, the City of Maribyrnong (covering Footscray, Maidstone, Maribyrnong, and Yarraville) has 30,484 households in total, while Hobsons Bay (covering Altona, Laverton, Newport, and Laverton) has 35,891 households in total. In other words, speculative vacancies are effectively withholding the equivalent of a whole municipality from the property market.

The biggest surprise was the sheer number of vacant shops, warehouses, factories, and offices revealed. Unlike the western suburbs of Melbourne, Melbourne’s south east is overwhelmingly residential. While non residential properties make up one in nine properties in Melbourne’s south east, nearly half (42.61%) of all property vacancies in Melbourne’s south east were non-residential. In effect, non-residential properties were four times more likely to be vacant than residential properties.

Alarmingly, nearly one in five non-residential properties are vacant in Melbourne’s south-east; a non-residential Genuine Vacancy Rate of 17.22%. This means that the vacancy rate for non-residential properties is above the 15% office vacancy rate found in Boston, at the centre of the global financial crisis. That such a glut is allowed to persist in light of the rental and housing affordability crises should be a serious concern for governments at all levels. In total, there are over 10,000 vacant shops, factories, offices, and warehouses in Melbourne’s south east.

The high non-residential vacancy rate has seen the emergence of a string of formerly industrial ‘rust-belt’ suburbs across Melbourne’s south east. These include Moorabbin (9.85% vacancy rate with 44.5% of properties zoned non-residential), Dandenong South (10.33% vacancy rate; 91.19% of properties non residential) and Bayswater (4.52% Genuine Vacancy Rate with 25.1% of properties zoned non-residential). Worse still is the result for nearby suburb of Lyndhurst, which has an astronomical 18.59% vacancy rate.

Finally, many properties remain vacant in the new developments in some of Melbourne’s gentrified inner suburbs. These include Collingwood (which has a 7.44% 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% vacancy rate in West Melbourne, and the 28.96% rate in Carlton South.

ANALYSIS

Speculative vacancies are motivated by capital gains being disproportionately higher than rental returns. While median house prices in Melbourne have climbed by $30,000 in the three months to September this year (The Age, 24th October), Melbourne’s landlords currently make a 4.2% return on the median price of a rental house (The Age, 7th July). Even with the power to write off costs under negative gearing, the variance between capital gains and rental income is often three to one.

Speculative vacancies also have lower holding costs than a properly maintained rental property, both in the form of lower property upkeep costs, and lower council rates (under a CIV system). In addition to these low holding costs, the withholding of properties over prolonged periods is motivated by high transaction costs on properties (in the form of stamp duty on the purchase of properties and Capital Gains Tax on the sales price of properties).

Non Residential Vacancies and Rust Belt Suburbs:

The alarmingly high rates of non-residential speculative vacancies and the emergence of a number of rust-belt suburbs cascade into detrimental impacts on businesses, the economy, and the residential property market.

The speculative vacancies in a number of ‘rust belt’ suburbs in Melbourne’s south east distort the commercial and industrial property market by withholding properties from the market. This in turn pushes up land and rental costs above what the prices would be were these properties available for sale or rent on the open property market. This has the flow on effect of making it more expensive for businesses to finance the purchase or rent of premises to conduct business.

The result is that a higher proportion of business revenue is devoted to financing the purchase or lease of property than is otherwise necessary. This revenue may otherwise have gone towards additional wages or jobs, investments in plant and capital, or higher dividends for shareholders. Alternatively, higher real estate costs are passed on to consumers, making Australian businesses less competitive in a global economy while putting inflationary pressure on the economy at large.

High non-residential vacancy rates and non-residential speculation also has an adverse impact on the residential property market. If there are properties which are surplus to the requirements to commerce and industry during a tight residential property market, then there should be a clear and straightforward process to redevelop vacant commercial and industrial properties for residential use.

It is worth noting that creative redevelopment and subdivision can yield a number of residential properties from a redeveloped warehouse or commercial site. In Melbourne’s former rust-belt inner city suburbs, such conversions (into loft-style apartments) have become quite fashionable. These have demonstrated the multiplier effect of one commercial or industrial property yielding several residential properties.

With increasing signals from Canberra that Australia’s future wealth is in the mining sector, the prevalence of non-industrial vacancies commands policy perscriptions to encourage infill.

Upmarket Suburbs:

The relatively high Genuine Vacancy Rates in several desirable inner city suburbs (including Collingwood, Southbank, Princes Hill, Carlton, West Melbourne, and Carlton South) suggests that property speculation is withholding housing from the property market, artificially pushing up real estate prices in these suburbs. This has the flow on effect of ‘pricing out’ people who would otherwise be interested in purchasing housing in these suburbs, and therefore increases demand for properties in the sprawling suburbs. A key priority must be to discourage speculation so these properties are released onto the market.

KEY RECOMMENDATIONS

An independent body (such as the Australian Bureau of Statistics) should gather Genuine Vacancy Rate statistics regularly so that the true state of housing supply is available.

Current Government policies aimed at addressing the housing and rental affordability crises (at both a State and Federal level) are structured to encourage more housing supply. Yet such policies do nothing to prevent this new supply being tied up in speculative vacancies.

However, there are public policy alternatives open to government at all levels (Local, State and Federal) that can address the structural issues causing vacant properties to be withheld from the market.

Local Government Policy: Council Rating Reforms

At a local government level, the most immediate structural remedy is to adopt a property ratings system which encourages disused properties to be released to the market.

The objective here should be to implement a property rating system which reduces the burden on households and businesses which effectively use their properties, while increasing the costs on vacant landholders to discourage speculation. In effect, all classes of property holders are then on an even footing.

To this end, economic historian Phil Anderson has noted in his comprehensive research into Victoria’s Municipal Ratings Systems (PDF 2.03MB) that:

“When Site Value Rating is the system in operation, the following classes of ratepayer generally pay more: vacant land holders, any sites with development potential, properties with a higher land to building ratio. The following pay less: extensively improved properties on small sites, owners of flats and units, ratepayers working in office suites, shopping centre lessees, properties with a higher improvement to land value. When CIV [Capital Improved Value] is the rating system in operation, the question of who pays more and who pays less is generally the reverse of that above.”[xxi]

A Capital Improved Value (CIV) rating system charges rates for both the underlying value of land holdings as well as any improvements to the land, making it cheaper (in terms of council rates) to hold a completely vacant block of land than it is to have a well maintained and effectively utilised property. The perverse consequence of this (as Anderson points out above) is to encourage more properties to be withheld from the market than would be the case under a Site Value Ratings system.

In contrast, a Site Value Ratings (SVR) system charges only for the underlying value of the land being held, and excludes the value of any improvements from the assessed rates for properties. This reduces the council rates on extensively improved properties, while increasing the burden for those withholding property from the market. This, in turn, discourages vacant land speculation and therefore discourages properties being withheld from the market.

Home-owners should not be taxed for developing their sites. Families should not pay higher taxes than land banking speculators.

State and Federal Policy: Tax Reform

At a State and Federal level, there is also scope for structural reforms to help rectify the problem of properties being withheld from the market.

The most notable structural cause of speculative vacancies at a State and Federal level is the imposition of transaction taxes on the sale of land. This occurs in the form of Stamp Duty at a State Level, and Capital Gains Tax at a Federal level. These transaction taxes insert a perverse incentive into the market in that they tax people who wish to make a vacant property available to the market, while not taxing people who withhold vacant properties from the market. This delays the turnover of property.

These State and Federal transaction taxes should be replaced with an improved State or Federal Land Tax. The Land Tax should be broader and flatter than at present. It is important to note that the introduction of a higher and flatter Land Tax should be coupled with revenue neutral tax cuts on Stamp Duty, Capital Gains Tax, and Payroll Tax. At a minimum this should be implemented to fund a 50% cut in income taxes.

These structural reforms would remove the government imposed market distortions which systematically encourage the withholding of properties (in the form of speculative vacancies), and encourage buyers and sellers to meet in the market place in order to transfer property and satisfy demand for accommodation.

CONCLUSION

Speculative vacancies continue to hamper the housing supply crisis.

Melbourne’s CBD vacancies have increased over the last year from 7% to an 8.63% Genuine Vacancy Rate.

The vacant property shortage myth must be corrected so that economic policy can be more effective. With the government’s preference for rapid population growth and the continual signals that Australia’s economic future relies on the development of ‘quarry Australia’, seaboard governments must seriously address the role of land hoarding in the affordability crisis.

With small business the largest employer in Australia, the role of speculative vacancies in the non-residential sector is of national significance. This is akin to a 17% unemployment rate for land. The higher rents this enforces on small business is a sleeping issue that will rise rapidly as businesses battle for a price advantage in the global marketplace. With interest rates the RBA’s only policy to cool the housing market, the high dollar will continue to sacrifice the manufacturing sector.

The role of land prices in the affordability crisis must be questioned when a 3 bedroom fibro house in the mining town of Port Headland costs $870,000.

It is time for governments to look at the speculative side of the housing supply issue in order to understand the market in detail. If housing is a human right, then our tax policies must genuinely reflect this.

Read the press release

Download 2009 Report PDF

Appendix 1
Appendix 2

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 vacancy rate in the inner city as compared to the much publicised 0.9% vacancy rate. The reported rate is a shocking one tenth of the genuine vacancy rate that speculators withhold from the market” said report author Tohm Curtis.

“At least $1 billion in vacant property exists in the inner city, and over $10 billion in Greater Melbourne.”

“The suburb of Carlton alone has sufficient vacancies to house all 220 reported homeless students at Melbourne Uni” said Mr Curtis.

“Last week the Housing Industry Association tried to claim that land supply is the cause of rising housing prices. Yet the 90,000 blocks opened up by Brumby earlier this year, on top of the 38,000 existing empty blocks of land held by Australia’s 6 biggest developers, have done nothing to curb rising land prices. Obviously there is another factor at play and our report demonstrates that it is speculation.” stated Project Coordinator Karl Fitzgerald.

“Brumby’s 2030 expansion is nothing more than a handout to property speculators. What he should focus on is tax reform to ensure that existing housing is used for living rather than the ‘laughing all the way to the bank mentality’ that land speculation enables.”

“Council budgets are stressed by further infrastructure expansions when existing residentially zoned land should be further utilised.”

“The least we should be doing to tackle climate change is to ensure that people are living as close to their places of employment as possible. It makes no sense for packed suburban trains and busy roads to be driving past vacant property after vacant property when there is space for people to live close enough to walk and cycle to work and school.” said Mr Fitzgerald.

“These speculative vacancies are unacknowledged by economists and politicians despite being reported in the Census as recently as 2006. Government should rely on its own reliable sources of information instead of using figures provided by the real estate industry. The REIV and Australian Property Monitors regularly report vacancies of 0.7-0.9%, based on those properties up for rent.” claimed Mr Curtis.

“These speculative vacancies exist because government policy reinforces this speculative behaviour. Policy at all levels of government have been designed to keep the housing bubble inflated” said Mr Curtis.

The I Want To Live Here report calls for genuine tax reform as the only means to ensure long term housing affordability and ensure future Boom Bust cycles are avoided. Higher and flatter holding taxes on land should be implemented to balance out the advantage that property speculation has over all other forms of business.

Key Findings:

* 2,317 vacant properties in inner Melbourne.
* 18,070 vacant properties in CityWest Water’s client base of Greater Melbourne.
* $1,044,967,000 worth of vacant property in the inner city.
* If 44 of the 2,317 vacant properties were leased or sold per week it would take over a year to clear the backlog.
* If this extra supply of housing was to hit the market the price of housing would become more affordable.
* Government policies of all levels are critiqued and fall short on many levels.

Read the Full Report (PDF 432kb)

Appendix 1 – CWW vacancy findings

Read the 2007 report

For questions or comments please contact:
Tohm Curtis, Researcher, Report Author, 0416 313 273, tohm@earthsharing.org.au
Karl Fitzgerald, Project Coordinator, (03) 9670 2754, k2@earthsharing.org.au

• 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.

Purpose:

To demonstrate that the vacancy rate advertised by the Real Estate Institute of Victoria does not represent the true state of the property market.

Introduction:

The real estate industry is calling for land release as a solution to the housing affordability crisis. This report demonstrates that the private supply of land held by speculators is the primary issue that needs to be addressed.

The proximity of Footscray to the CBD and its price differential sees it as prime territory for speculation. Speculative pressures are the dominant force impeding housing affordability.

New supply of federal land will mean little, as it will be snapped up by speculators rather than first homeowners. Families and young people are handicapped in the property market by a range of tax advantages that assist those who own land to own even more.

Low capital gains and negative gearing are regularly discussed as limiting affordability. However, the 1996 Kennett changes to CIV council rates has seen the family household with its capital improvements pay higher rates than the wealthy vacant landowner.

This has also lead to a reduction in rental housing stock, as it is cheaper for the landlord to let property fall into disrepair than fix it. It is even cheaper for them to demolish the property to reduce their share of the rating burden. State governments have also contributed to the demise of housing affordability by sending constant signals to the property sector that Land Tax will be reduced.

A holding charge on land is essential to curtail the influence of ‘speculative vacancies’ on housing affordability.

The benefits to the community are considerable. If 1058 people were added to the Bluestone Wards’ population of 9000 people, local business would enjoy a considerable fillip with the demand for goods and services required by an additional 11.7% of people.

First homebuyers would benefit too. If the 430 properties were encouraged onto the market with a holding charge on land, this would considerably add to the amount of land up for auction. With a conservative estimate of 35 auctions (www.homepriceguide.com.au) taking place in the ward each month, adding 430 properties over 12 months would virtually double the supply of auctions.

This would help level the playing field, creating a buyers market power for people who want to use land for housing rather than speculation.

Melbourne 2030 is being threatened by a dysfunctional tax policy that encourages ‘doughnut’ development.

Photographic Evidence: (vacancies in red)

Bluestone Ward West

Bluestone Ward North (pink – vacancies outside the ward)

Bluestone Ward Central

Bluestone Ward South

Method:

The Bluestone Ward was surveyed from the ground via bicycle. Vacancies were recorded via digital camera and then onto spreadsheets.

Google Earth was used with its bird’s eye view to estimate the number of dwellings per vacant site ie a comparison of the number of neighbouring dwellings that would fit on that land.

Conservative estimations were maintained in estimating all dwellings on vacant land. Ie a quarter acre block saw 1 dwelling, not the 2-3 houses as per modern development trends. No multi-story apartments were included in our calculations.

The average number of occupants per dwelling is 2.46 in the City of Maribyrnong.

Findings:

• Vacant land sites – 399
• Vacant buildings – 31
• Total – 430 Vacant Properties
• Vacant land accounted for 982 people
• Vacant houses accounted for 76 people
• Total – 1058 people

Period:

All calculations were made on Fri Sept 21st, 2007.

Genuine Vacancies:

The present 1.4% vacancy rate (REIV) only includes rental properties in the rental market. We propose that there is a much higher rate of vacant land if we include ‘speculative vacancies’ – those properties withheld from the market to manufacture additional capital gains. Vacant land is the dominant marker of this trend.

We advocate the need for a ‘genuine vacancy’ rate – one that includes both ‘rental vacancies’ and ‘speculative vacancies’.

Such a calculation would give the general public a better understanding of the inefficiencies within the land market. From this we could evolve to a fairer land policy that encourages reward for effort over reward for speculation.

The I Want to Live Here survey covered the significant land holdings of the former Pacific Dunlop site, Cross St, Footscray West (as seen in the Bluestone Ward Central photo). This nine-acre site has been vacant since 2001, greatly reducing the supply of land in the region, pushing up prices in surrounding areas. Once the ‘Banbury Village’ development is built the dwellings will no doubt be drip-fed to the market to maximise profits, meaning that land may have remained vacant on the site for over a decade.

It must be noted that if speculative vacancies from apartments were included, the 1058 figure would be substantially higher.

Why does the Reserve Bank allow the Real Estate Industry to be the sole supplier of figures for which they have a vested interest in publishing?

Speculative Prowess:

Any prospective first home owner valiantly searching for a place would be shocked to realise that 1058 people could live in Bluestone Ward if a fairer land policy was adopted. This finding is significant in an environment where we are constantly told that vacancies are at a record low.

Furthermore, the current peak in the property cycle typically finds that much vacant land has already been sold off with the profit maximising motif in mind. Thus if we were to look back at the mid point of this property cycle, the 1058 figure understates the typical inefficiencies in the property market.

The Urban Development Institute of Australia releases a Land Price Index, which monitors the number of sites sold and the prices attained for land. Any rational property developer would utilise such information to ensure the supply of land is limited to maximise prices.

The Issue:

At present an average vacant site in Footscray goes for approximately $220,000. This sees a Land Tax on only $20,000 over the $200,000 threshold. This would cost just $240 p.a. Add council rates of $800 onto this and the holding charge is barely $1000. With property increasing by 30% in Footscray over the last 12 months, such a holding charge is dwarfed by the profits to be made in this paper-shuffling industry.

A site value of $220,000 is typical of the median $330,000 house. Thus the constant bickering over Land Tax equates to just $240 for speculators to pay on the properties first homebuyers are trying to purchase. Such minimal charges encourage land hoarding to maximise prices.

Conclusion:

The hidden supply of land withheld from the market by private speculators can be addressed using market forces. A reformed Land Tax, in the form of a Site Rental, should be implemented along the lines of the Victorian Government’s 2001 Harvey Report recommendations.

A higher Site Rental rate, set at a flat percentage rate could easily fund the abolition of stamp duties and payroll tax, and pay for a reduction in the regressive sales tax.

With the political difficulties inherent in a democratic system where vested interests dominate political campaign donations, the administering of such a sensitive policy should be handed to the apolitical Reserve Bank.

The 430 vacant sites found in just one small ward in the City of Maribyrnong contribute greatly to affordability pressures. If a Site Rental was implemented at a responsible level (upwards of 1.5%), these properties would soon find their way onto the market. This added supply would limit if not reverse the drastic land price inflation we are seeing. The benefits would see small business encouraged, local employment improved and wages increase.

Why then are governments so unwilling to address this issue?

“I do not deny that all taxes, with the exception of those on economic rent and inherited wealth, have some employment and economic growth effects.”John Howard, 10/12/1991 – p15 AFR

Is there perhaps another reason that vested interests talk so loudly on this topic? A Site Rental is a levy that can’t be evaded. Speculative vacancies are a national trend that must be addressed.

Author: Karl Fitzgerald, B.Ec, Project Coordinator, Earthsharing Australia

Researcher: Kellie Gee

Contact: (03) 9670 2754 k2@earthsharing.org.auPDF Version IW2LH report (PDF 3.5MB)

I Want to Live Here report by Karl Fitzgerald is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 2.5 Australia License.

Appendix 1

Definitions:

• Vacant land – any property that was unused, as demonstrated by an empty lot. This does not include parkland.
• Vacant dwellings – property that is boarded up and/or unkept.
• The survey focused on detached and semi detached buildings. A number of retail premises available for lease for a significant period of time (6 months or longer) were also included in the study.

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.

Poor Maxxy, stuck in front of his Nintendo Xbox after quitting his latest telemarketing job, decides to take a break. Walking to the video shop he stops to take a leak. Pissing through the fence he realises he’s hardly noticed this place. A giant block of vacant land, with grass that cows would lick their lips for.

It used to be a Socks factory. Then it was vacant. It got sold. It got sold again. It got sold again again. Then someone knocked it down. Then it got sold another few times.

All along, nobody did anything useful with it. It was wasted.

So was the hope of Maxxy and his mates. How could he afford a roof over his head when people can waste something that others so desperately need? Shooting away on his gamebox, he wondered whether his people had been excluded from the game of life.

The next few times he walked past he started thinking about this block more and more. Then he happened to roll past during an auction. He stopped and watched as a crowd of serious looking men and women huddled around the auctioneer. Some nodded and the auctioneer winked. Others waved a hand whilst a few held mobile phones out for listeners to listen. It all wound up with someone smiling and someone in the background smiling even more.

Chatting to his mate Billy in the aisles of the video shop, Maxxy heard that the vacant block went for $900.000. ‘Yeah they made $140,000 in 9 months’.
Doing what?
‘Oh nothing, just waiting round, you know, sitting on it until the time is right.’
“Gee that sounds a bit rich! How do I get a job for doing nothing?”

Maxxy started checking this game out. He read an article by a guy from the Institute of Public Affairs, a renowned right wing think tank, where it was stated ‘The value of a block of raw land is only a few thousand dollars but the government restricts the use of land for housing.’

“Well that’s not what I’ve seen” boiled Maxxy. $900.000 for a $140,000 profit sounds like it’s actually worth quite a bit. Maybe this dude should have a look at rich people wasting the supply of land! For all those years Maxxy had walked by the old Socks factory and never smelt a whiff of what’s curbing his chance to get his own place.

Maxxy’s brother heard about his new interest. As a successful businessman he invited Maxxy along to a “Tax Minimisation for Lawyers” seminar he’d heard a few whispers about. Situated at the top end of Collins St, the room was packed with the sorts of people Maxxy saw at the Socks factory auction. Long trench coats and silver spoons were the flavour of the day. Just like in the movies, the little guy running the show had all the legal books behind him, the pretty blond assistant with the attitude and the hands moving like a conductor.

But he was conducting a different sort of show to what Maxxy had seen before. The projector had facts and figures coming from all angles. Cash at 5%, International sharemarkets at 8.7%, Oz shares at 12.2%. Then the property graph hit him with a 15.5% growth rate over the last decade in Melbourne. Anyone could understand that this was the game to be involved in. And the conductor didn’t let him forget it either.

“It’s your job to be out on Saturday mornings, looking for the trendy alternative types. Find the cool café and see who’s visiting. The locals and their prams, the hippy clothes and the cute dog. Keep an eye on them. That’s where you want to be investing. Even better, move to the next happening café, further out. If there’s a few coolio’s there, that’s where you want to buy up.”

“And the tax system is made for this. I can get you depreciation on concrete, as if it’s falling off the walls.” Snigger, snigger. “And then there’s negative gearing. Don’t forget I can save you on cap gains”. The list of tax evasion techniques continued.

All the time the conductor made no connection to the fact that the tenants these investors would be renting to were the ones who paid for the roads and schools with their tax. No, our trench coat mob wont be paying squat with an accountant like this guy. “$450 million at my fingertips”.

And to think some are saying it’s the councils and governments causing the housing troubles! “It’s that bloody boring tax law!” thought Maxxy. He left feeling like he’d been a spy in a secret battle, where the victims have no idea of the battle they’re in.

Maxxy saw Dr Internet that night, finding a report by the UN’s Special Rapporteur for Housing, ‘With Australia’s negative gearing policy, perhaps the most generous of all developed countries, and the tax benefit from capital gains, a subsidy of $21 billion is given to the high end market.’

Soon he found a few alternatives to make housing affordable. Instead of paying taxes, we should just pay one simple fee, a Site Rental, based on the land we own. Land would then be used efficiently. Why should workers and businessmen have to be super efficient, but landlords subsidised to be wasteful? The simple things often work the best, he thought.

He started to read a little faster as he learnt that inner city blocks then won’t be left idle for years. Owners will make them economic by renting them, starting a business or selling this unique asset. This hidden supply of vacant blocks and empty investor apartments would push down the price of land. “Yes” he thought, “that’s why there’s a few empty apartments over at Susie’s, mmm and I reckon there’s one or two at Reggie’s too”. Land is now 65% of the cost of a mortgage, reverse of the 70’s when it was only 35%.

One line brought a smile to Maxxy’s face. “Then no one could hide their money in tax havens.”

They even say this is what economists really want. Capturing land rents is the most efficient way for government to raise revenue. Prices to goods drop by 50% plus when you remove the fifteen plus taxes that contribute to the cost of each purchase. That’s how Hong Kong, South Korea and the East Asian Tigers have done so well. Maxxy read with amazement that 92% of people in Singapore own their own house.

The thoughts started flying through his head “Why pay someone to have a place on the earth? Isn’t finding a home the most important thing we do in life? The Great Australian Dream…anyone? It’s the government’s job to look after us all. Why help the rich get richer? Who cares if they donate money to the politician’s campaigns! We don’t need to sprawl any further, we need to use the land we’ve got more efficiently. Melbourne is already bigger than the City of Greater London.”

Maxxy trudged off thinking that this debate over land supply and building costs was a great diversion plan. ‘Keep the tax breaks rolling’ say the Collins St cruisers, ‘Let’s speculate on future generations un-affordability.’ Will their conscience ever awaken for a bruising? Or a car jacking?

Riding his bike later that week, Maxxy started a new trend. Every time he passed a vacant block of land or a derelict old house with the mailbox overflowing, he jumped off his bike and slammed a picketed sign hard into the ground – “I want to live here!”

Earthsharing Australia has released the first ‘I Want to Live Here’ Report, demonstrating the extent to which speculative vacancies are the hidden issue in the housing affordability debate.

The ‘I Want to Live Here’ report found that 1058 people could live on vacant sites within the Bluestone Ward (City of Maribyrnong). This Google Earth photo of Bluestone Ward West shows a snapshot of some of the many vacancies.

“Housing affordability debates focussed on government controlled land supply were today dispelled” stated Karl Fitzgerald, the report’s author.

“It is the privately controlled supply of land by speculative interests that is heating the market to record levels. It is also driving the argument for unlimited sprawl.”

“Even if Commonwealth Land was put onto the market, speculative interests would snap up the property and drip feed it to the market. History shows that land release only leads to more designer suburbs with a focus on ‘lifestyle’ living, not affordable housing. First home owners cannot compete with speculators under the current tax regime.”

The findings include:
* 1058 people could live in 430 vacant properties within this municipality.
* 93% of these were vacant blocks of land.
* The ‘official’ vacancy rate should include ‘speculative vacancies’ to reflect the genuine vacancies in the land and property market.

The report’s findings on speculative vacancies were discovered by Earthsharing Australia in an extensive survey of the Bluestone Ward, covering parts of Footscray, Footscray West and Tottenham.

“Victoria’s much publicised Vacancy Rate of 1.4% radically understates the true situation in the land and property market. ‘Speculative vacancies’ are not included in this figure. Only properties on the rental market are included by the Real Estate Institute of Victoria in their vacancy statistics.”

“Young people are bidding for rental properties, paying months in advance to secure a place to live, yet they are surrounded by vacant land and housing that is shut off to them in the name of private profit. Neither political party is offering any solution to this issue.”

“The questions we must ask are ‘Why don’t either of the political parties promote the taxing of economic rents?’ and ‘Why are property developers the major beneficiaries of the ‘solutions’ on offer?’”

Speculating on the Great Australian Dream should be deterred by a Federally implemented Site Rental charge on all land, replacing income taxes.

Read the full ‘I Want to Live Here’ Report