Earthsharing Australia — Speculative Vacancies in Melbourne: 2012 Report

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Earth­shar­ing Aus­tralia, in col­lab­o­ra­tion with Pros­per Aus­tralia and the Land Val­ue Research Group (LVRG), has put togeth­er the Spec­u­la­tive Vacan­cies in Mel­bourne: 2012 Report, authored by Philip Soos. The report is for­mu­lat­ed from water usage data pro­vid­ed by City West Water and Yarra Val­ley Water to esti­mate prop­er­ty vacan­cies in the Mel­bourne area.

Earth­shar­ing Aus­tralia has been pro­duc­ing the Spec­u­la­tive Vacan­cies report annu­al­ly since 2008. The report clas­si­fies a vacant prop­er­ty as real estate show­ing water con­sump­tion less 50 litres per day (50L/d) aver­aged over the six months peri­od, July-Decem­ber 2011.

North Essendon revealed the high­est vacan­cy rate of 14.6%, with 212 prop­er­ties below the 50L/d water usage, out of 1449 sur­veyed prop­er­ties. Fol­lowed close­ly by Dock­lands, at 14.1%. How­ev­er, the argu­ment that Dock­lands have pri­vate stor­age facil­i­ties with sep­a­rate water metres has been debat­ed.

Philip sug­gest­ed, ‘the the­o­ry as to why so many homes are emp­ty is due to the tor­rent of annu­al cap­i­tal gains out­weigh­ing net rental income by a mul­ti­ple, thus some land­lords may believe it is bet­ter to let prop­er­ties sit emp­ty while the land appre­ci­ates in val­ue.’

What were even more alarm­ing were the com­mer­cial prop­er­ty vacan­cy rates. The well-adver­tised Car­o­line Springs showed a whop­ping 64.6%, with 181 of 281 prop­er­ties below the 50L/d water usage. Notably, com­mer­cial real estate would like­ly have less depen­dence on water usage.

The report also address­es some of the alter­na­tive method­olo­gies for mea­sur­ing prop­er­ty vacan­cies, such as the Real Estate Insti­tute of Vic­to­ria (REIV) and SQM Research, and the strengths and weak­ness­es in their approach­es.

This report damp­ens the hopes of a sus­tained increase in house prices after a home prices jump after RBA cuts. The increase in Poten­tial Long-Term Vacan­cy Rates in Mel­bourne from 4.94% in 2010 to 5.90% in 2011 is like­ly to equate to fur­ther down­ward pres­sure on Mel­bourne home val­ues.

It is refresh­ing to read a report from an unbi­ased insti­tu­tion with puri­ty in con­tent. Many thanks to Philip Soos, Earth­shar­ing Aus­tralia, Pros­per Aus­tralia and LVRG, for pro­duc­ing this valu­able per­spec­tive.

Earth­shar­ing Aus­tralia is an orga­ni­za­tion based in Mel­bourne that seeks to advance eco­nom­ic effi­cien­cy and social jus­tice through tax reform and edu­ca­tion. Along with its part­ner orga­ni­za­tions Pros­per Aus­tralia and the Land Val­ues Research Group (LVRG), it is at the fore­front of advo­cat­ing ideas and poli­cies based upon the work of the U.S. clas­si­cal lib­er­al econ­o­mist Hen­ry George (1839- 1897), who believed pover­ty and social dis­or­der stems from the mis­use of the third fac­tor of pro­duc­tion, land. By advo­cat­ing the cap­ture of the eco­nom­ic rents of nat­ur­al resources, Earth­shar­ing Aus­tralia pro­motes the elim­i­na­tion of behav­iour-dis­tort­ing tax­es on cap­i­tal and labour.