Prosper Australia has released its 10th Speculative Vacancies report, which estimates that there are 69,000 homes sitting vacant across Victoria in 2019:
Key Findings
Water usage data finds 69,004 properties vacant, a ratio of 4.1% in 2019.
Vacancies recorded in 2019 could house 185,000 people at current household averages.
Vacancies increased 13.3% between 2017 and 2019.
Properties using zero litres per day on average over 12 months totalled 24,042, a ratio of 1.4%.
When added to the short term rental rate, some 4.7% of properties were likely vacant.
Up to 16.1% of investor owned residential properties were potentially vacant.
Just 12.3% more properties were sold as were likely vacant.
These findings do not include 370,000 vacant land lots, largely within master planned communities.
The Valuer General’s quantification of residential property ‘assessments without buildings’ equates to approximately 63,314, a similar volume to our findings.
Three times the amount of non-residential property stood vacant as was sold in last year’s vibrant industrial market.
The state government’s Vacant Residential Land Tax was levied on only 2.6% of absolute vacancies. No fines have been recorded against non-declaring landholders. Water consumption has not been used as a vacancy indicator. Weak enforcement has cost the taxpayer at least $160 million a year.
Vacancy rates in the gentrification belt of the inner north, alongside the cultural hotspot of mid eastern suburbs such as Box Hill and Glen Waverley, increased markedly in 2014 remaining >5% over five years.
Executive Summary
Prosper’s tenth analysis of vacant land and housing finds that 69,004 properties were likely vacant in 2019. This represents a 4.1% speculative vacancy rate.
This number of empty or underutilised properties could house over 185,000 people, making short change of Victoria’s 80,000 person public housing waiting list.
There were 24,042 properties which consumed zero litres of water per day on average over the 12 month period. That is 1.4% of tall residential properties observed.
When combined with Melbourne’s advertised rental vacancy rate of 2% and expressed as an equivalised ratio, the total vacancy rate reaches 4.7%.
For the non-residential property sector, covering commercial and industrial, we found 10.9% of properties used 0LpD (litres per day) over 12 months. That equates to 14,252 properties. This is approximately three-times the number of commercial and industrial properties sold in 2019.
Over the thirteen years Prosper has reported on vacancy in Greater Melbourne, the total number of absolute vacancies has risen to around 20,000 and remained stable for the past five years.
Speculative vacancies, properties consuming <50 liters of water per day over a 12 month period, have a median of 64,500 since 2012.
The Victorian government’s Vacant Residential Property Tax (VRLT) was introduced in 2018 to deter vacancies in selected inner Melbourne suburbs. The tax relies on voluntary self-reporting.
In 2017-18, 469 property owners self-declared 716 vacant residential sites to the State Revenue Office. This equated to 3.4% of the absolute vacancies we observed in 2017.
In 2018-19 the number of declared vacancies fell to 587 properties. This equated to only 2.6% of properties that used 0LpD over 12 months in 2019.
Either some 20,000 properties met the criteria for exemption, or there are some issues with compliance. If the tax was applied more thoroughly to the postcodes in our study area, state revenue would increase by between $160 million to $495 million per year, whilst deterring lazy land use.
This report recommends that the VRLT be extended to cover Greater Melbourne, rebased on site value to reduce distortion, with heavier penalties for non-compliance.
Innovative tax mechanisms such as escalating land taxes should be investigated for rezoned sites and master planned communities to disincentivise ‘drip-feeding’ market behaviour.
Finally, this report has long advocated for the effective taxation of land as a deterrent to under-utilisation. We expect the replacement of stamp duty with a land value tax will reduce vacancy, if implemented at an effective rate.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
