A new report claims rental prices in Melbourne are being kept high due to the tens of thousands of homes that appear to be vacant.
Non-government organisation Prosper Australia’s Speculative Vacancies report suggests the surge in rents is not due to a shortage of homes, but vacant properties that are not being rented out.
“The concern is that properties, both residential and commercial, are kept off the rental market because owners seek gain, not from rental income, but from capital gains as land prices have rapidly increased in recent times,” the report said.
Between the 2006 and 2011 census, the number of unoccupied dwellings in greater Melbourne increased from 119,623 (8.1 per cent) to 141,506 (9.0 per cent).
Prosper Australia based their figures of vacant properties on water consumption figures from Melbourne’s water retailers during the 2012 calendar year.
An analysis of over 1,469,514 residential properties indicated 64,465 properties (4.4 per cent) were potentially unused, as they had used less than the cut-off point of 50 litres per day, and 12,691 residential properties (0.9 per cent) did not consume any water and were therefore unoccupied.
“If residential properties consuming no water were placed on the market for rent, it would double the number of homes available and increase the vacancy rate to around six per cent,” the report continued.
According to the group, escalation in land values means landlords have an incentive to withhold properties from the rental market as they profit from rising capital values rather than from long-term rental income.
Prosper Australia said the government needed to investigate why many residential properties appeared vacant, particularly considering the strong surge in residential rents since 2006.
“While policymakers are content spending billions of dollars annually on rent assistance, negative gearing and the national rental affordability scheme, the need for such support could be moderated if even a portion of these potentially vacant properties was put on the market,” it said.
In an interview with ABC, director of SQM Research Louis Christopher said there were issues with the data, as there were properties that could perhaps be unoccupied but still not available for rent.
"Let's consider, for example, a holiday home. A holiday home may be completely unoccupied for 11 out of 12 months in a year,” he said.
"It would come up in their measurement, but sadly this property is still not available for rent.
"And I think Prosper's point in all this is that they would like to see some change in the taxation laws, where these type of unoccupied properties are almost forcibly put on the market, available for rent, with a view that would then put some downward pressure on rent."