Prepared by Prosper Australia, the Speculative Vacancies Report attempts to measure how many vacant homes are in Melbourne by analysing how much water they use each year.
According to the latest edition of the report which analysed water usage over 2014, 82,724 homes in the greater Melbourne area used less than 55 litres of water a day.
Prosper claims that level of water usage is the equivalent of a single tap being allowed to drip all day and is much less water than the average person would use in a day, suggesting that those homes are being left vacant.
If so, that would mean 4.8% of homes in Melbourne were vacant during 2014.
Karl Fitzgerald, Prosper Australia’s project director, said the number of vacant houses is the result of owners preferring to hoard properties for their capital gains and shows that talk of housing under supply is off the mark.
“The incentives for property speculators to hold prime locations empty is an affront to anyone locked out of housing. The findings prove we do not have a housing supply crisis, we are literally locked out,” Fitzgerald said.
“With capital gains accelerating in 2014, the Speculative Vacancy rate rose 22% for properties using less than 50 litres of water per day. According to our most conservative measure, those using zero litres of water increased by a concerning 70%,” he said.
The report claims that investors in particular are guilty of leaving properties vacant, with it Fitzgerald claiming nearly 20% of all investment properties in Melbourne are sitting empty.
“This is clear evidence land is being hoarded for profit. Up to 18.9% of all investment properties lie empty. This report demonstrates over eight years that hoarding is magnified in periods of increased speculation,” he said.
Prosper argues that governments should replace stamp duty with an annual land tax, believing the recurring cost would encourage owners to make their properties available to rent.
Paul Osborne, head of Melbourne based buyers’ agency Secret Agent, said the Prosper figures were probably an accurate picture of the situation in Melbourne.
“Those figures are probably about right and I think the method of looking at water usage is a pretty good way of finding out what’s really going on,” Osborne said.
“You always find some people who would rather just hold onto property for the capital growth rather than rent it out. There seems to be a bit of trend of that increasing and that might be because with interest rates being so low the holding costs are low at the moment,” he said.
If you were to look at the numbers in isolation Osborne said it would be true that housing supply is not an issue, but it’s a matter of whether that supply is of the right type of housing.
“We need to look at what types of properties are vacant and where they are. I don’t think there’s an under supply of housing, but I don’t think we have enough of the right type of housing.
“A lot of people want live in the inner-city areas, but a lot of that is locked up through different residential zoning laws and for other reasons and it’s hard to create any new supply there.
“But in the CBD there’s a push to create development and it’s easier to create new supply, but the problem is people aren’t wanting to move into those areas.”