“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.

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Australia’s endless debate about property prices pivots on the balance of supply and demand.

Earthsharing’s Speculative Vacancies in Melbourne 2010 Report demonstrates that nearly five percent of all houses in Melbourne are simply empty and unused.

The report identifies and measures the scale and extent of speculative vacancies – properties held out of use in the pursuit of capital gains – using water meter data collated by the various utilities.

“The REIV consistently points to it’s Rental Vacancy rate of 1.7 per cent as the sole measure of vacancies in Melbourne,” Earthsharing Research Director Karl Fitzgerald said today at the release of the report. “Our survey shows one in twenty houses and apartments are just sitting there vacant.

“Recent increases in house prices have been driven by speculation, not a housing shortage. Property owners are restricting the supply of housing by holding properties off the rental market.

“We estimate the Speculative Vacancy Rate for Melbourne in 2011 to be 4.94 per cent or 46,220 of 935,305 properties surveyed.

“More than 20 suburbs surveyed had estimated vacancy rates in excess of 8 per cent. There are notable hot spots in Docklands, Williams Landing, East Melbourne and Truganina,” Fitzgerald said.

“Supply and demand in these suburbs is significantly mismatched and should be monitored carefully for distress as housing prices recede.

“Docklands (23.3 per cent vacant) is particularly interesting as builders there have been obliged for some years by their financiers to offset risk by pre-selling a very substantial proportion of apartment before commencing construction. The vacancies there are largely owned by individuals, many of whom paid a very small deposit and signed a water-tight contract obliging them to pay the remainder on completion. These contracts are coming due just as the price trend turns down decisively,” Fitzgerald concluded.

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