New data reveals more than 31,000 Melbourne homes sat empty last year as long term vacancy surged across key suburbs.
Enough Melbourne homes to house a capacity crowd at the city’s second biggest stadium are sitting empty as the city struggles with a worsening rental and homelessness crisis.
Prosper Australia’s latest analysis shows the number of totally empty homes, assessed as having zero water useage in the past year, and dubbed “ghost homes” by the researchers doing the analysis rose sixteen per cent in a year to 31,890.
With the state’s average household size currently around 2.5 people per home, the vacant properties could comfortably house a more 53,000-person capacity crowd at Marvel Stadium.
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When including homes with minimal water use the total climbs to 100,945 empty or underused dwellings across the city.
Prosper Australia advocacy director Rayna Fahey said the surge in “ghost homes” was now cancelling out a significant share of Victoria’s building program.
“Melbourne added enough empty homes last year to offset one in every nine new homes built,” Ms Fahey said.
Prosper’s analysis found the highest concentrations of long term vacancy in Whitehorse, Merri-bek and Boroondara.
In Whitehorse one in every 34 homes recorded zero water use for the entire year.
Merri-bek saw a similar pattern and Boroondara recorded several thousand long term empty homes.
Ms Fahey said the state still had no clear understanding of who owned these properties or why they had been “offline for so long”.
“We do not know who owns these homes, how long they stay empty or what is stopping them from being occupied,” she said.
“Without that information we are flying blind.”
Prosper Australia advocacy director Rayna Fahey warns long term empty homes are cancelling out Victoria’s new housing supply. Picture: Josie Hayden
She said some growth areas may include newly completed homes that were connected to water, but not yet lived in — although the lack of detailed reporting made it impossible to identify causes.
The surge comes as Housing Victoria data shows a fall in active rental bonds across the past eighteen months.
Ms Fahey said the trends could be connected, but the state did not collect the data needed to confirm.
Local examples highlight the problem. Ms Fahey pointed to a former public housing site in Braybrook that was sold, cleared and fenced more than a decade ago and has remained empty despite being opposite a school and between two hospitals.
PIPA chair Cate Bakos says leasing rules and rising costs are forcing everyday investors to leave homes sitting empty.
Melbourne buyers advocate and Property Investment Professionals of Australia chair Cate Bakos said many empty homes were not a sign of deliberate speculation, but were stuck in limbo because of leasing rules, sales campaigns and rising holding costs.
“You can bet a big chunk of those empty properties are holiday homes or investor stock that owners are preparing to sell,” Ms Bakos said.
“And the irony is it does nothing to help their sales campaign.”
Ms Bakos said a major driver was the state’s leasing laws.
Under Victoria’s Residential Tenancies Act a landlord who ends a lease because they plan to sell the home cannot relet the property for six months once the tenant moves out — unless VCAT grants special permission.
Whitehorse, Merri bek and Boroondara recorded some of Melbourne’s highest long term vacancy rates. Picture: David Crosling
“The timing can trap an owner,” she said.
“If they get it wrong they can lose half a year of rent even if they want tenants back in the home.
“That rule alone puts a lot of properties into a holding pattern.”
Ms Bakos said everyday investors were also dealing with rising land tax bills, heavier compliance pressures and ongoing uncertainty around rental regulations.
“It is a less flexible and far more onerous environment than it used to be,” she said.
“These investors are not speculators; they are just trying to keep up.”
Shadow housing minister Richard Riordan says Victoria’s tax and compliance settings are driving landlords out of the long term rental market. Picture: Brad Fleet
Victorian shadow housing minister Richard Riordan said the rise in long term empty homes reflected a broader collapse in investor confidence.
“The real issue here is not the number of empty homes but the Andrews Allan Government’s ongoing war on property owners; this hostile environment has driven private landlords out of the market at a rate we have never seen,” Mr Riordan said.
“It has become so hard to offer a stable long term rental in Victoria that many owners have simply given up.
“Of course homes are sitting empty … vacancies are rising. Owners are consciously choosing to leave homes unused because renting them out has become almost impossible.”
Experts say the fall in active rental bonds may signal fewer homes available for long term tenants. Picture: David Crosling
Mr Riordan said many older properties had effectively become unrentable because of compliance rules that required costly upgrades.
“If you have a home that was perfectly liveable a few years ago but was built before 1990 you can bet that a long list of new compliance rules now stops you renting it without massive and expensive upgrades,” he said.
“People are being asked to rip out kitchens that worked fine because the rangehood is too low, we have confusion about gas appliances. It is endless.”
The Victorian shadow minster for housing said the cumulative impact of land tax changes, compliance requirements and tenancy rules had fuelled investor withdrawal across the state.
“Every property manager I have spoken with reports a collapse in long term rental listings. In some communities it is close to a fifty per cent drop,” Mr Riordan said.
“This Government’s addiction to land and property taxes is fuelling the rental crisis.”
A Victorian Government spokesperson says utility based vacancy counts can include properties exempt from the vacant residential land tax. Picture: Josie Hayden
A Victorian Government spokesperson said recent changes to the vacant residential land tax and the introduction of a 7.5 per cent levy on short stay accommodation were aimed at discouraging land banking and supporting more affordable and social housing — leading to fewer homes sitting vacant.
However, they noted the Prosper analysis may count properties not liable for the vacant residential land tax.
“Estimating vacant properties based on utilities usage could include properties that are not subject to vacant residential land tax,” the spokesperson said.
They added that Victoria continued to build and approve more homes than any other state and had introduced measures to return more dwellings to the rental market.
“Victoria continues to build and approve thousands more homes than any other state and we have introduced measures to return homes to the market and encourage more owners to make their dwellings available for rent,” they said.
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